Discontinue a Segment Esther Corporation has the following three divisions, Alpha, Bravo and Charlie. Determine whether...
| Discontinue a Segment | ||||||
| Esther Corporation has the following three divisions, Alpha, Bravo and Charlie. | ||||||
| Determine whether or not Charlie Division should be discontinued. All fixed costs | ||||||
| are unavoidable. | ||||||
| Alpha | Bravo | Charlie | Total | |||
| Sales | 500,000 | 450,000 | 600,000 | 1,550,000 | ||
| Cost of Goods Sold | ||||||
| Variable | 200,000 | 150,000 | 300,000 | 650,000 | ||
| Fixed | 50,000 | 50,000 | 100,000 | 200,000 | ||
| Total CGS | 250,000 | 200,000 | 400,000 | 850,000 | ||
| Gross Margin | 250,000 | 250,000 | 200,000 | 700,000 | ||
| Operating Expenses | ||||||
| Variable | 175,000 | 200,000 | 200,000 | 575,000 | ||
| Fixed | 25,000 | 25,000 | 25,000 | 75,000 | ||
| Total Operating Expenses | 200,000 | 225,000 | 225,000 | 650,000 | ||
| Net Income | 50,000 | 25,000 | (25,000) | 50,000 | ||
Homework Answers
Solution:
Contribution margin provided by Charlie division = Sales - Variable COGS - Variable operating expenses
= $600,000 - $300,000 - $200,000 = $100,000
As fixed costs are unavoidable, therefore discontinuing Charlie division will result in loss of contribution margin of $100,000, therefore division should not be discontinued.
Add Answer to:
Discontinue a Segment
Esther
Corporation has the following three divisions, Alpha, Bravo and
Charlie.
Determine
whether...
A recent accounting graduate from Lethbridge University evaluated the operating performance of Fane Company's three divisions....
A recent accounting graduate from Lethbridge University evaluated the operating performance of Fane Company's three divisions. The following presentation was made to Fane’s Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $20,000, as shown in the analysis below. Other Two Divisions Southern Division Total Sales $1,000,000 $300,000 $1,300,000 Cost of Goods Sold 650,000 200,000 850,000 Gross Profit 350,000 100,000 450,000 Operating Expenses 100,000 120,000 220,000 Net Income $ 250,000 $...
A recent accounting graduate from Lethbridge University evaluated the operating performance of Fane Company's three divisions....
A recent accounting graduate from Lethbridge University evaluated the operating performance of Fane Company's three divisions. The following presentation was made to Fane’s Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $20,000, as shown in the analysis below. Other Two Divisions Southern Division Total Sales $1,000,000 $300,000 $1,300,000 Cost of Goods Sold 650,000 200,000 850,000 Gross Profit 350,000 100,000 450,000 Operating Expenses 100,000 120,000 220,000 Net Income $ 250,000 $...
A recent accounting graduate from SFU evaluated the operating performance of Gibco Company's three divisions. The...
A recent accounting graduate from SFU evaluated the operating performance of Gibco Company's three divisions. The following presentation was made to management where she recommended eliminating the Western Division because net income would increase by $15,000, as shown in the analysis below. North and South Divisions Western Division Total Sales $1,000,000 $305,000 $1,305,000 Cost of Goods Sold 650,000 200,000 850,000 Gross Profit 350,000 105,000 455,000 Operating Expenses 100,000 120,000 220,000 Net Income $ 250,000 $ (15,000) $ 235,000 Cost of...
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has...
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $325,000, variable expenses of $159,600, and traceable fixed expenses of $72,800. The Alpha Division has sales of $635,000, variable expenses of $345,800, and traceable fixed expenses of $135,900. The total amount of common fixed expenses not traceable to the individual divisions is $138,200. What is the company's net operating income?
S8-5 Decide whether to discontinue a department (Learning Objective 4) Mila Fashion in New York operates...
S8-5 Decide whether to discontinue a department (Learning Objective 4) Mila Fashion in New York operates three departments: Men's, Women's, and Accessories. Mila Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. Departmental operating income data for the third quarter of the current year are as follows: WN Mila Fashions Product Line Contribution Margin Income Statement For the Year 6 7 Sales revenue 8 Less: Variable expenses 9 Contribution margin 10 Less: Fixed...
Prepare incremental analysis concerning elimination of divisions P7.5A (LO 6), AN Brislin Company has four operating...
Prepare incremental analysis concerning elimination of divisions P7.5A (LO 6), AN Brislin Company has four operating divisions. During the first quarter of 2020 the company reported aggregate income from operations of $213,000 and the following divisional results Excel Division IV п ш I $200,000 192,000 60,000 $450,000 250,000 50,000 $250,000 200,000 75,000 $500,000 300,000 Sales Cost of goods sold Selling and administrative expenses 60,000 $(52,000) $140,000 $150,000 Income (loss) from operations $(25,000) Analysis reveals the following percentages of variable costs...
ABC Corporation has three service departments with the following costs and activity base: Service Department Cost...
ABC Corporation has three service departments with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 number of copies Accounting 500,000 number of invoices processed Personnel Department 400,000 number of employees ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows: Micro Macro Super Direct revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices...
ABC Corporation has three service departments with the following costs and activity base: Service Department Cost...
ABC Corporation has three service departments with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 number of copies Accounting 500,000 number of invoices processed Personnel Department 400,000 number of employees ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows: Micro Macro Super Direct revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices...
P20-5A Prepare incremental analysis concerning elimination of divisions. Brislin Company has four operating divisions. During the...
P20-5A Prepare incremental analysis concerning elimination of divisions. Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $213,000 and the following divisional results. Division IV Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $250,000 200,000 75,000 ($25,000) $200,000 192,000 60,000 ($52,000) $500,000 300,000 60,000 $140,000 $450,000 250,000 50,000 $150,000 Analysis reveals the following percentages of variable costs in each division. 90% 75% Cost of...
P20-5A Prepare incremental analysis concerming.elimination of divisions Brislin Company has four operating divisions. During the first...
P20-5A Prepare incremental analysis concerming.elimination of divisions Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $213,000 and the following divisional results. Division II $500,000 300,000 60,000 IV $200,000 Sales $250,000 200,000 75,000 $450,000 250,000 Cost of goods sold Selling and administrative expenses Income (loss) from operations 192,000 60,000 50,000 ($25,000) ($52,000) $140,000 $150,000 Analysis reveals the following percentages of variable costs in each division. II III IV Cost...
S8-5 Decide whether to discontinue a department (Learning Objective 4) Mila Fashion in New York operates three departments: Men's, Women's, and Accessories. Mila Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department's square footage. Departmental operating income data for the third quarter of the current year are as follows: WN Mila Fashions Product Line Contribution Margin Income Statement For the Year 6 7 Sales revenue 8 Less: Variable expenses 9 Contribution margin 10 Less: Fixed...
Prepare incremental analysis concerning elimination of divisions P7.5A (LO 6), AN Brislin Company has four operating divisions. During the first quarter of 2020 the company reported aggregate income from operations of $213,000 and the following divisional results Excel Division IV п ш I $200,000 192,000 60,000 $450,000 250,000 50,000 $250,000 200,000 75,000 $500,000 300,000 Sales Cost of goods sold Selling and administrative expenses 60,000 $(52,000) $140,000 $150,000 Income (loss) from operations $(25,000) Analysis reveals the following percentages of variable costs...
P20-5A Prepare incremental analysis concerning elimination of divisions. Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $213,000 and the following divisional results. Division IV Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $250,000 200,000 75,000 ($25,000) $200,000 192,000 60,000 ($52,000) $500,000 300,000 60,000 $140,000 $450,000 250,000 50,000 $150,000 Analysis reveals the following percentages of variable costs in each division. 90% 75% Cost of...
P20-5A Prepare incremental analysis concerming.elimination of divisions Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $213,000 and the following divisional results. Division II $500,000 300,000 60,000 IV $200,000 Sales $250,000 200,000 75,000 $450,000 250,000 Cost of goods sold Selling and administrative expenses Income (loss) from operations 192,000 60,000 50,000 ($25,000) ($52,000) $140,000 $150,000 Analysis reveals the following percentages of variable costs in each division. II III IV Cost...
Most questions answered within 3 hours.
-
26) Briefly describe, using words or simple diagrams, the
chemiosmotic theory for coupling oxidation to phosphorylation...
asked 9 minutes ago -
Suppose that XX is a random variable with mean 16 and standard
deviation 5 . Also...
asked 1 hour ago -
Calculate the number density of argon gas at a temperature of
24C and a pressure of...
asked 4 hours ago -
Alternative
Classification
How to Estimate
Probabilities from Data? ( For continuous Attributes)
And How to generate...
asked 4 hours ago -
An explosion breaks a 20.0-kg object into three parts. The
object is initially moving at a...
asked 5 hours ago -
Calculate the approximate number of residues of Rubisco, which
is involved in carbon fixation in plants,...
asked 6 hours ago -
Other decisions about scientific claims can have a much broader
impact.ENERGYarrow-10x10.png, environment, health, security - all...
asked 7 hours ago -
I need to write a research paper and work cited about this
topic: The United States...
asked 7 hours ago -
Hello! I was wondering if I could have some help?
If the vapor pressure of carvone...
asked 7 hours ago -
An economist wants to estimate the mean per capita income (in
thousands of dollars) for a...
asked 8 hours ago -
What would be the input/output characteristic of a circuit
obtained by putting two of your 2's-complementers...
asked 8 hours ago -
In Drosophila, the transition from the syncytial blastoderm
stage to the cellular blastoderm stage is a...
asked 8 hours ago