Problem 20-5A (Part Level Submission) Brislin Company has four operating divisio
ID: 2540407 • Letter: P
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Problem 20-5A (Part Level Submission) Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $205,000 and the following divisional results.
Problem 20-5A (Part Level Submission) Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $205,000 and the follovwing divisional results. Division IV Sales Cost of goods sold Selling and administrative S247,000 $198,000 $501,000 $448,000 200,000 190,000 298,000 254,000 64,000 63,000 45,000 75,000 Income (loss) from operations $140,000 $149,000 (28,000) (56,000) Analysis reveals the folloing percentages of variable costs in each division. Cost of goods sold Selling and administrative IV 78 % 57 67 % 88 % 81 % 38 57 50 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 paren Division I Division II marginExplanation / Answer
a Division I Sales 247000 Variable expenses: Cost of goods sold 134000 =200000*67% Selling and administrative expenses 28500 =75000*38% Contribution margin 84500 Division II Sales 198000 Variable expenses: Cost of goods sold 167200 =190000*88% Selling and administrative expenses 36480 =64000*57% Contribution margin -5680
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