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Math Help - Accounting: Incremental Analysis?

  1. #1
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    Nov 2012
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    Accounting: Incremental Analysis?

    Moreno Manufacturing Company has four operating divisions. During the first quarter of 2011, the company reported aggregate income from operations of $175,800 and the following divisional results.
    Division
    I II III IV
    Sales $249,000 $197,500 $504,200 $402,900
    Cost of goods sold 199,000 191,200 295,100 252,000
    Selling and administrative expenses 69,300 61,400 57,600 52,200
    Income (loss) from operations ($19,300) ($55,100) $151,500 $98,700
    Analysis reveals the following percentages of variable costs in each division.
    I II III IV
    Cost of goods sold 70
    %
    89
    %
    81
    %
    76
    %
    Selling and administrative expenses 41 69 51 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.

    Compute the contribution margin for Divisions I and II.

    I got:
    $
    $



    Prepare an incremental analysis concerning the possible discontinuance of Division I.
    Continue Eliminate Net Income
    Increase (Decrease)
    Contribution margin $ $ $
    Fixed expenses
    Cost of goods sold
    Selling and administrative
    Total fixed expenses
    Income (loss) from operations $ $ $


    This is what I have, but Im not sure if they're right. Someone please help me, this problems killing me.
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  2. #2
    Junior Member
    Joined
    Nov 2012
    From
    america
    Posts
    25

    Re: Accounting: Incremental Analysis?

    I guess copying and pasting didnt work.
    for the contribution margins, I got 69087 for Division 1 and 1354 for Division 2.
    For the chart, under continue I have:
    69087
    61400
    44474
    105874
    19300

    Under Eliminate:
    0
    35696
    19404
    55100
    55100

    Under net income
    69087
    35696
    19404
    55100
    13987
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