Veronica Mars, a recent graduate of Bell€™s accounting program, evaluated the operating performance of Dunn Company€™s six divisions. Veronica made the following presentation to Dunn€™s board of directors and suggested the Percy Division be eliminated. €œIf the Percy Division is eliminated,€ she said, €œour total profits would increase by $26,000.€

In the Percy Division, cost of goods sold is $61,000 variable and $15,000 fixed, and operating expenses are $30,000 variable and $20,000 fixed. None of the Percy Division€™s fixed costs will be eliminated if the division is discontinued.

Instructions
Is Veronica right about eliminating the Percy Division? Prepare a schedule to support youranswer.

The Other Percy Five Divisions vision Total Sales Cost of goods sold Gross profit Operating expenses Net income $1,664,200 978,520 685,680 527,940 157,740 $100,000 $1,764,200 1,054,520 709,680 577,940 $ (26,000 131,740 76,000 24,000 50,000