Ayayai Company has four operating divisions. During the first
quarter of 2017, the company reported aggregate income from
operations of $230,500 and the following divisional
results.
Division | |||||||||
I | II | III | IV | ||||||
Sales | $245,000 | $195,000 | $495,000 | $443,000 | |||||
Cost of goods sold | 195,000 | 190,000 | 295,000 | 245,000 | |||||
Selling and administrative expenses | 67,500 | 55,000 | 55,000 | 45,000 | |||||
Income (loss) from operations | $ (17,500) | $ (50,000) | $145,000 | $153,000 |
Analysis reveals the following percentages of variable costs in
each division.
I | II | III | IV | ||||||||||
Cost of goods sold | 66 | % | 87 | % | 77 | % | 73 | % | |||||
Selling and administrative expenses | 37 | 57 | 47 | 57 |
Discontinuance of any division would save 50% of the fixed costs
and expenses for that division.
Top management is very concerned about the unprofitable divisions
(I and II). Consensus is that one or both of the divisions should
be discontinued.
Solution
Division | ||||
I | III | IV | Total | |
Sales | $ 245,000.00 | $ 495,000.00 | $ 443,000.00 | $ 1,183,000.00 |
Variable costs | $ - | |||
Cost of goods sold | $ 128,700.00 | $ 227,150.00 | $ 178,850.00 | $ 534,700.00 |
Selling and administrative expenses | $ 24,975.00 | $ 25,850.00 | $ 25,650.00 | $ 76,475.00 |
Total variable cost | $ 153,675.00 | $ 253,000.00 | $ 204,500.00 | $ 611,175.00 |
Contribution margin | $ 91,325.00 | $ 242,000.00 | $ 238,500.00 | $ 571,825.00 |
Fixed costs | ||||
Cost of goods sold | $ 66,300.00 | $ 67,850.00 | $ 66,150.00 | $ 200,300.00 |
Selling and administrative expenses | $ 42,525.00 | $ 29,150.00 | $ 19,350.00 | $ 91,025.00 |
Total fixed costs | $ 108,825.00 | $ 97,000.00 | $ 85,500.00 | $ 291,325.00 |
Income (loss) from operations | $ (17,500.00) | $ 145,000.00 | $ 153,000.00 | $ 280,500.00 |
Working
Division | ||||
I | II | III | Iv | |
Cost of goods sold | $ 195,000.00 | $ 190,000.00 | $ 295,000.00 | $ 245,000.00 |
Variable cost of goods sold % | 66% | 87% | 77% | 73% |
Variable cost of goods sold | $ 128,700.00 | $ 165,300.00 | $ 227,150.00 | $ 178,850.00 |
Selling and administrative expenses | $ 67,500.00 | $ 55,000.00 | $ 55,000.00 | $ 45,000.00 |
Variable Selling and administrative expenses % | 37% | 57% | 47% | 57% |
Variable Selling and administrative expenses | $ 24,975.00 | $ 31,350.00 | $ 25,850.00 | $ 25,650.00 |
Ayayai Company has four operating divisions. During the first quarter of 2017, the company reported aggregate...
Flint Company has four operating divisions. During the first
quarter of 2017, the company reported aggregate income from
operations of $204,500 and the following divisional results.
Division
I
II
III
IV
Sales
$253,000
$195,000
$504,000
$446,000
Cost of goods sold
199,000
192,000
300,000
248,000
Selling and administrative expenses
75,500
60,000
64,000
55,000
Income (loss) from operations
$ (21,500)
$ (57,000)
$140,000
$143,000
Analysis reveals the following percentages of variable costs in
each division.
I
II
III
IV
Cost of goods...
Flint Company has four operating divisions. During the first
quarter of 2017, the company reported aggregate income from
operations of $204,500 and the following divisional results.
Division
I
II
III
IV
Sales
$253,000
$195,000
$504,000
$446,000
Cost of goods sold
199,000
192,000
300,000
248,000
Selling and administrative expenses
75,500
60,000
64,000
55,000
Income (loss) from operations
$ (21,500)
$ (57,000)
$140,000
$143,000
Analysis reveals the following percentages of variable costs in
each division.
I
II
III
IV
Cost of goods...
Pina Company has four operating divisions. During the first
quarter of 2017, the company reported aggregate income from
operations of $212,300 and the following divisional
results.
Division
I
II
III
IV
Sales
$254,000
$199,000
$501,000
$443,000
Cost of goods sold
204,000
190,000
301,000
247,000
Selling and administrative expenses
69,700
61,000
57,000
55,000
Income (loss) from operations
$ (19,700)
$ (52,000)
$143,000
$141,000
Analysis reveals the following percentages of variable costs in
each division.
I
II
III
IV
Cost of goods...
Flint Company has four operating divisions. During the first
quarter of 2017, the company reported aggregate income from
operations of $204,500 and the following divisional results.
Division
I
II
III
IV
Sales
$253,000
$195,000
$504,000
$446,000
Cost of goods sold
199,000
192,000
300,000
248,000
Selling and administrative expenses
75,500
60,000
64,000
55,000
Income (loss) from operations
$ (21,500)
$ (57,000)
$140,000
$143,000
Analysis reveals the following percentages of variable costs in
each division.
I
II
III
IV
Cost of goods...
Pina Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $212,300 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $254,000 204,000 69,700 $ (19,700) Division III $199,000 $501,000 190,000 301,000 61,000 57,000 $ (52,000) $143,000 IV $443,000 247,000 55,000 $141,000 Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I...
Pina Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $212,300 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $254,000 204,000 69,700 $ (19,700) Division III $199,000 $501,000 190,000 301,000 61,000 57,000 $ (52,000) $143,000 IV $443,000 247,000 55,000 $141,000 Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I...
Pina Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $212,300 and the following divisional results. 1 Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $254,000 204,000 69,700 $(19,700) Division II III $199,000 $501,000 190,000 301,000 61,000 57,000 $ (52,000) $143,000 IV $443,000 247,000 55,000 $141,000 Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses...
Culver Company has four operating divisinns. During the first quarter of 2017, the company reported aggregate income from operations of $205,100 and the following divisional results. II Division III $199,000 $499,000 191,000 298,000 63,000 63,000 S (56,000) $138,000 $750,000 198,000 74,900 S (22,900) Cost of goods sold Selling and administrative expenses Income (lees) frur operations IV $446,000 254,000 46,0IDD $146,00D Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I...
Problem 12-5 Riverbed Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $191,000 and the following divisional res I results. Division II III IV Sales $250,000 $198,000 $496,000 $443,000 Cost of goods sold 205,000 190,000 297,000 255,000 Selling and administrative expenses 70,000 64,000 61,000 54,000 $ (25,000) Income (loss) from operations $ (56,000) $134,000 $138,000 Analysis reveals the following percentages of variable costs in each division. II III IV 89...
Problem 7-5 (Part Level Submission)
Pina Company has four operating divisions. During the first quarter
of 2017, the company reported aggregate income from operations of
$212,300 and the following divisional results.
Division
I
II
III
IV
Sales
$254,000
$199,000
$501,000
$443,000
Cost of goods sold
204,000
190,000
301,000
247,000
Selling and administrative expenses
69,700
61,000
57,000
55,000
Income (loss) from operations
$ (19,700)
$ (52,000)
$143,000
$141,000
Analysis reveals the following percentages of variable costs in
each division.
I
II...