Tools Help Hele s Exercise 21-15 Veronica uggested the Percy Division be elimina

Question

Tools Help Hele s Exercise 21-15 Veronica uggested the Percy Division be eliminated. "If the Percy Divicion is eiminated, she sald, "our total prcfits would increase by $24200. The Other Percy Five Divisions Division Total Sales Cost of goods sold Gross profit Operaling expenses Net income 1,663,000 $100,100 $1,763,100 654,400 23,300 576,000- thion cost of sooda sold in 159,300 variabse nd $17 50 fbred, and perating espernces are 31,409 ariable end 3 1,10 fed heres df hx We Diaiemsed ote - te parentheses e.g. (45)) Net Income (Decrease) Sales Variable coots Cost of goods sold Operating expenses Contrbution margin Foced costs Cost of goods sold

Explanation / Answer

Schedule to show if Veronica Mars should Eliminate Percy division is as shown below:

Variance will increase by $9,400 and Net loss will also increase from 26,200 to 35,600.

Continue Eliminate Net Income Increase (Decrease) Sales 100,100 0 -100,100 Variable costs Cost of goods sold 59,300 0 -59,300 Operating Expenses 31,400 0 -31,400     Total variable 90,700 0 -90,700 Contribution Margin 9,400 0 -9,400 Fixed Costs Cost of goods sold 17,500 17,500 0 Operating Expenses 18,100 18,100 0     Total Fixed 35,600 35,600 0 Net Income (loss) -26,200 -35,600 -9,400

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