Question
In: Accounting
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
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.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The results of May, 2013 are presented...
Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The
results of May, 2013 are presented below. Bud Wise Er Total Units
sold 3,000 5,000 2,000 10,000 Revenue $70,000 $ 50,000 $ 40,000 $
160,000 Less variable costs 32,000 26,000 16,000 74,000 Less direct
fixed costs 14,000 19,000 12,000 45,000 Less allocated fixed costs
6,000 10,000 4,000 20,000 Net income $18,000 $ (5,000 ) $ 8,000 $
21,000 All of the allocated costs will continue even if a division
is...
In your opinion, is Emerson wise to reposition itself by branding all of its divisions with...
In your opinion, is Emerson wise to reposition itself by
branding all of its divisions with the Emerson name? Why would this
be beneficial in selling to business markets? How might it be a
disadvantage?
Wilson Inc. has three divisions, Alpha, Beta and Gamma. Following is the income statement for the...
Wilson Inc. has three divisions, Alpha, Beta and Gamma.
Following is the income statement for the previous
year:
Alpha
Beta
Gamma
Total
Sales
$
1,000,000
$
575,000
$
425,000
$
2,000,000
Variable Costs
400,000
345,000
300,000
1,045,000
Contribution Margin
600,000
230,000
125,000
955,000
Fixed Costs
375,000
215,625
159,375
750,000
Profit Margin
225,000
14,375
(34,375
)
205,000
Of the fixed costs, $300,000 is for corporate costs and is
allocated equally to the three divisions.
How much does Gamma Division have in...
Altoona Technologies, Inc. has three divisions. Altoona has a desired rate of return of 11.0 percent....
Altoona Technologies, Inc. has three divisions. Altoona has a
desired rate of return of 11.0 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
740,000
$
115,440
Copier
1,010,000
101,000
Fax
560,000
72,800
Total
$
2,310,000
$
289,240
Altoona headquarters has $140,000 of additional cash to invest
in one of its divisions. The division managers have identified
investment opportunities that are expected to yield the following
ROIs:
Expected ROIs for...
Franklin Technologies, Inc. has three divisions. Franklin has a desired rate of return of 12.0 percent....
Franklin Technologies, Inc. has three divisions. Franklin has a
desired rate of return of 12.0 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
610,000
$
102,480
Copier
880,000
99,440
Fax
430,000
61,060
Total
$
1,920,000
$
262,980
Franklin headquarters has $127,000 of additional cash to invest
in one of its divisions. The division managers have identified
investment opportunities that are expected to yield the following
ROIs:
Expected ROIs...
Baird Technologies, Inc. has three divisions. Baird has a desired rate of return of 13.0 percent....
Baird Technologies, Inc. has three divisions. Baird has a
desired rate of return of 13.0 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
560,000
$
98,000
Copier
830,000
97,940
Fax
380,000
55,860
Total
$
1,770,000
$
251,800
Baird headquarters has $122,000 of additional cash to invest in
one of its divisions. The division managers have identified
investment opportunities that are expected to yield the following
ROIs:
Expected ROIs...
Question: Altoona Technologies, Inc. (ATI) has three divisions. ATI has a desired rate of return of...
Question: Altoona Technologies, Inc. (ATI) has three divisions.
ATI has a desired rate of return of 12.5 pe...
Altoona Technologies, Inc. (ATI) has three divisions. ATI has a
desired rate of return of 12.5 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
540,000
$
96,000
Copier
810,000
90,000
Fax
360,000
54,000
Total
$
1,710,000
$
240,000
ATI headquarters has $120,000 of additional cash to invest in
one of...
Rundle Technologies, Inc. has three divisions. Rundle has a desired rate of return of 12.0 percent....
Rundle Technologies, Inc. has three divisions. Rundle has a
desired rate of return of 12.0 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
660,000
$
107,580
Copier
930,000
100,440
Fax
480,000
65,760
Total
$
2,070,000
$
273,780
Rundle headquarters has $132,000 of additional cash to invest in
one of its divisions. The division managers have identified
investment opportunities that are expected to yield the following
ROIs:
Expected ROIs...
Jordan Technologies, Inc. has three divisions. Jordan has a desired rate of return of 12.0 percent....
Jordan Technologies, Inc. has three divisions. Jordan has a
desired rate of return of 12.0 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
630,000
$
104,580
Copier
900,000
99,900
Fax
450,000
63,000
Total
$
1,980,000
$
267,480
Jordan headquarters has $129,000 of additional cash to invest in
one of its divisions. The division managers have identified
investment opportunities that are expected to yield the following
ROIs:
Expected ROIs...
Jordan Technologies, Inc. has three divisions. Jordan has a desired rate of return of 12.0 percent....
Jordan Technologies, Inc. has three divisions. Jordan has a
desired rate of return of 12.0 percent. The operating assets and
income for each division are as follows:
Divisions
Operating Assets
Operating Income
Printer
$
630,000
$
104,580
Copier
900,000
99,900
Fax
450,000
63,000
Total
$
1,980,000
$
267,480
Jordan headquarters has $129,000 of additional cash to invest in
one of its divisions. The division managers have identified
investment opportunities that are expected to yield the following
ROIs:
Expected ROIs...
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