Aggregate income from operations of 213000 and the

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aggregate income from operations of $213,000 and the following divisional results. Division I II III IV Sales $250,000 $200,000 $500,000 $450,000 Cost of goods sold 200,000 192,000 300,000 250,000 Selling and administrative expenses 75,000 60,000 60,000 50,000 Income (loss) from operations ($25,000) ($52,000) $140,000 $150,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 75% 90% 80% 75% Selling and administrative expenses 40% 70% 50% 60% Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Instructions: Problem P7-5A Gutierrez Company has four operating divisions. During the first quarter of 2014, the company reported Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be continued. (a) Compute the contribution margin for Divisions I and II. Managerial Accounting, 6 th Edition, by Weygandt, Kieso, and Kimmel Primer on Using Microsoft Excel in Accounting by Rex A Schildhouse
(b)(1) Prepare an incremental analysis concerning the possible discontinuance of Division I.
Division II Continue Eliminate Contribution margin (above) Amount Amount Formula Fixed costs Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula
Enter text answer here. Enter text answer here. GUTIERREZ MANUFACTURING COMPANY CVP Income Statement For the Quarter Ended March 31, 2014 Divisions I III IV Total Sales Amount Amount Amount Formula Variable costs Title Formula Formula Formula Formula Title Formula Formula Formula Formula Title Formula Formula Formula Formula Contribution margin Formula Formula Formula Formula Fixed costs Title Formula Formula Formula Formula Title Formula Formula Formula Formula Title Formula Formula Formula Formula Income (loss) from operations Formula Formula Formula Formula Enter text answer here. Enter text answer here. $213,000 with the total income from operations without Division II. Enter text answer here.

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