Concord Company has four operating divisions. During the first quarter of 2017,

Question

Concord Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $183,700 and the following divisional results.

Analysis reveals the following percentages of variable costs in each division.

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.

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 II III IV Sales $250,000 $198,000 $499,000 $443,000 Cost of goods sold 200,000 194,000 305,000 255,000 Selling and administrative expenses 70,300 62,000 65,000 55,000 Income (loss) from operations $ (20,300) $ (58,000) $129,000 $133,000

Explanation / Answer

Division I II Sales $250,000 $198,000 Variable Cost of goods sold ($132,000) ($170,720) Selling and administrative expenses ($26,714) ($35,340) fixed Contribution $91,286 ($8,060) Cost of goods sold 68,000 23,280 Selling and administrative expenses 43,586 26,660 Income (loss) from operations ($20,300) ($58,000)

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