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.Analysis reveals the following percentages of variable costs in each division.
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
Discontinuance of any division would save 50% of the fixed costs and expenses for that division.
I II III IV Cost of goods sold 70 % 89 % 81 % 76 % Selling and administrative expenses 41 69 51 59
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.
Prepare an incremental analysis concerning the possible discontinuance of Division I.
Continue Eliminate Net Income
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.