Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The results of May, 2013 are presented below <img width="519" height="111" src="//img.wizedu.com/questions/2548ae30-cfb1-11ec-9221-49b76a3472fc.png" alt="Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The" /><p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; font-size: 14px; line-height: 1.6; color: rgb(88, 89, 91); font-family: "Open Sans", sans-serif; white-space: normal; background-color: rgb(255, 255, 255);">All of the allocated costs will continue even if a division is discontinued. Milwaukee allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Milwaukee feels that it should be discontinued. Milwaukee feels if the division is closed, that sales at the Bud division will increase by 12%, and that sales at the Er division will stay the same. Instructions (a) Prepare an analysis showing the effect of discontinuing the Wise division. (b) Should Milwaukee close the Wise division? Briefly indicate why or why not.

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Milwaukee, Inc. has three divisions: Bud, Wise, and Er.

Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The results of May, 2013 are presented below

Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The

All of the allocated costs will continue even if a division is discontinued. Milwaukee allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Milwaukee feels that it should be discontinued. Milwaukee feels if the division is closed, that sales at the Bud division will increase by 12%, and that sales at the Er division will stay the same.
Instructions
(a) Prepare an analysis showing the effect of discontinuing the Wise division.
(b) Should Milwaukee close the Wise division? Briefly indicate why or why not.

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Expert Solution

ekkarill92 answered 2 years ago

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