Question

Problem 20-05A a, b1-b3, c (Part Level Submission) Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $212,000 and the following divisional results. Division I II III IV Sales $246,000 $195,000 $498,000 $452,000 Cost of goods sold 198,000 192,000 304,000 247,000 Selling and administrative expenses 77,000 54,000 56,000 51,000 Income (loss) from operations $ (29,000) $ (51,000) $138,000 $154,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 73 % 92 % 77 % 79 % Selling and administrative expenses 41 60 48 62 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) Your answer is correct. 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).) Division I Division II Contribution margin $ $ Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION LINK TO TEXT Attempts: 2 of 2 used

Attempts: 1 of 2 used

(b2) Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Contribution margin $ $ $ Fixed costs    Cost of goods sold    Selling and administrative       Total fixed expenses Income (loss) from operations $ $ $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

	Division I	Division II
Sales	$       2,46,000	$          1,95,000
Variable Costs
Cost of Goods sold	$       1,44,540	$          1,76,640
Selling and administrative expenses	$           31,570	$             32,400
Contribution Margin	$          69,890	$            -14,040

b2. Possible Discontinuance of Division II

	Continue	Eliminate	Increase (Decrease)
Contribution Margin	$         -14,040	$                      -	$                      14,040
Fixed Costs
Cost of Goods sold	$           15,360	$                7,680	$                         7,680
Selling and administrative expenses	$           21,600	$             10,800	$                      10,800
Total Fixed Expenses	$           36,960	$             18,480	$                      18,480
Income (Loss) from Operations	$         -51,000	$            -18,480	$                      32,520