Brislin Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $213,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations Cost of goods sold Selling and administrative expenses Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations Cost of goods sold Selling and administrative expenses Analysis reveals the following percentages of variable costs in each division. I $250,000 $200,000 200,000 192,000 300,000 75,000 60,000 60,000 $(25,000) $(52.000) $140,000 1 70 % 40 I I 11 90 % 40 11 60 Division 11 60 ||| IV 80 % 75 % 50 $500,000 200,000 75,000 $(25,000) $(52,000) $140,000 192,000 III 11 70 % 90 % 80 % 50 60,000 60 ||| $250,000 $200,000 $500,000 $450,000 250,000 Analysis reveals the following percentages of variable costs in each division. 300,000 60,000 IV IV 75 % 60 $450,000 250,000 50,000 $150,000 IV 50,000 $150,000 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.
Brislin Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $213,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations Cost of goods sold Selling and administrative expenses Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations Cost of goods sold Selling and administrative expenses Analysis reveals the following percentages of variable costs in each division. I $250,000 $200,000 200,000 192,000 300,000 75,000 60,000 60,000 $(25,000) $(52.000) $140,000 1 70 % 40 I I 11 90 % 40 11 60 Division 11 60 ||| IV 80 % 75 % 50 $500,000 200,000 75,000 $(25,000) $(52,000) $140,000 192,000 III 11 70 % 90 % 80 % 50 60,000 60 ||| $250,000 $200,000 $500,000 $450,000 250,000 Analysis reveals the following percentages of variable costs in each division. 300,000 60,000 IV IV 75 % 60 $450,000 250,000 50,000 $150,000 IV 50,000 $150,000 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.
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 8PA: The following revenue data were taken from the December 31, 2017, Coca-Cola annual report (10-K):...
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Transcribed Image Text:Prepare an incremental analysis concerning the possible discontinuance of Division 1. (Enter negative amounts using either a negative
sign preceding the number eg. -45 or parentheses e.g. (45).)
Contribution margin.
Fixed costs
Cost of goods sold
Selling and administrative
Total fixed expenses
Income (loss) from operations
Continue
Eliminate
0
Net Income
Increase (Decrease)
Transcribed Image Text:Brislin Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from
operations of $213,000 and the following divisional results.
Sales
Cost of goods sold
Selling and administrative expenses
Income (loss) from operations
Cost of goods sold
Selling and administrative expenses
Sales
Cost of goods sold
Selling and administrative expenses
Income (loss) from operations
$250,000
Cost of goods sold
Selling and administrative expenses
200,000
I
75,000
$(25,000)
I
70 %
40
Analysis reveals the following percentages of variable costs in each division.
1
200,000
40
11
75,000
60
||
90 %
$200,000 $500,000
192,000
300,000
Division
60,000
$(52,000)
60
11
||
|||
80 %
60,000
50
$140,000
$250,000 $200,000
192,000
60,000
$(25,000) $(52,000) $140,000
IV
75 %
60
Analysis reveals the following percentages of variable costs in each division.
I
|||||
IV
70 % 90 % 80 % 75 %
50
IV
60
$450,000
250,000
$500,000 $450,000
300,000 250,000
60,000
50,000
50,000
$150,000
IV
$150,000
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.
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