Question

Please help me fill out these tables for accounting, thanks!

Indigo Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results.

		Division
		I		II		III		IV
Sales		$250,000		$198,000		$499,000		$447,000
Cost of goods sold		195,000		194,000		298,000		250,000
Selling and administrative expenses		70,300		62,000		57,000		49,000
Income (loss) from operations		$ (15,300)		$ (58,000)		$144,000		$148,000

Analysis reveals the following percentages of variable costs in each division.

		I			II			III			IV
Cost of goods sold		74	%		92	%		78	%		73	%
Selling and administrative expenses		37			57			51			59

Discontinuance of any division would save 50% of the fixed costs
Indigo Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results. IV Sales Division II III $198,000 $499,000 194,000 298,000 62,000 57,000 $ (58,000) $144,000 $250,000 195,000 70,300 $ (15,300) Cost of goods sold $447,000 250,000 49,000 $148,000 Selling and administrative expenses Income (loss) from operations Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I 74 % 37 II 92 % 57 III 78 % 51 Iν 73 % 59 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.
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.

Answer 1

Contribution Margin of Division I & II

	Division I	Division II
Sales	2,50,000	1,98,000
Variable Cost:
Cost of Goods Sold	1,44,300	1,78,480
Selling and administrative expenses	26,011	35,340
Contrinution Margin	79,689	(15,820)

Incremental analysis concerning discontinuation of Division I
	Continue	Eliminate	Net Income Increase / (Decrease)
Contribution Margin	79,689	0	(79,689)
Fixed Costs:
Cost of Goods Sold	50700	25,350	25,350
Selling and administrative expenses	44289	22,145	22,145
Total Fixed Expenses	94989	47494.5	47,495
Income / (loss) from Operation	(15,300)	(47,495)	(32,195)

Thus if Division I is eliminated, net income of the overall company shall reduce by $32,195. Hence it is recommended to continue the Division 1.

Incremental analysis concerning discontinuation of Division II
	Continue	Eliminate	Net Income Increase / (Decrease)
Contribution Margin	(15,820)	0	15,820
Fixed Costs:
Cost of Goods Sold	15520	7,760	7,760
Selling and administrative expenses	26660	13,330	13,330
Total Fixed Expenses	42180	21090	21,090
Income / (loss) from Operation	(58,000)	(21,090)	36,910

Thus if Division II is eliminated, net income of the overall company shall increase by $36,910. Hence it is recommended to discontinue the production in Division II.

Income Statement of Indigo Co. assuming division II is eliminated
	Division I	Division III	Division IV	Total
Sales	250000	499000	447000	1196000
Variable Costs:
Cost of Goods Sold	1,44,300	232440	182500	559240
Selling and administrative expenses	26,011	29070	28910	83991
Total Variable Costs	1,70,311	2,61,510	2,11,410	643231
Contribution Margin	79,689	2,37,490	2,35,590	552769
Fixed Costs:
Cost of Goods Sold	50700	65560	67500	183760
Selling and administrative expenses	44289	27930	20090	92309
Fixed Costs (Allocated of Division II):
Cost of Goods Sold	2,587	2,587	2,587	7760
Selling and administrative expenses	4,443	4,443	4,443	13330
Total Fixed Cost	102019	100520	94620	297159
Income / (loss) from Operation	(22,330)	1,36,970	1,40,970	255610