Please show all work Problem 7-5A (Part Level Submission) Brislin Company has fo

Question

Please show all work

Problem 7-5A (Part Level Submission) Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $231,300 and the following divisional results. Analysis reveals the following percentages of variable costs in each division. 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. (a) Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Attempts: O of S used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Divisions                                                           I                       II              

Sales                                                       $253,000         $195,000        

Variable cost of cost of goods sold    $131,990    $169,100   

Varialble cost-selling and administration $ 28,009         $ 35,340     

Total variable cost                                    $ 159,999        $204,440    

Contribution Margin                              $   93,001       - $   9,440

Division I has positive contribution margin and, therefore , should not be discontinued.

Division II has a negative contribution margin and should , therefore, be discontinued.

Fixed cost are not relevant since it cannot be avoided for any division because it will be incurred irrepective of whether the divisions will be continued or not.

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