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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 $211,600 and the
following divisional results.
Division
I
II
III
IV
Sales
$245,000
$197,000
$504,000
$450,000
Cost of goods sold
200,000
191,000
301,000
249,000
Selling and administrative expenses
72,400
63,000
58,000
50,000
Income (loss) from operations
$ (27,400)
$ (57,000)
$145,000
$151,000
Analysis reveals the following percentages of variable costs in each division.
I
II
III
IV
Cost of goods sold
73%
91%
82%
75%
Selling and administrative expenses
39
59
50
61
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
parentheses e.g. (45).)
Division I
Division II
Contribution margin
