Hello Can you please helo me out with this problem below are the illustrations i

Question

Hello Can you please helo me out with this problem

below are the illustrations is says for guidance if needed, 20-17, 20-18,20-16

Wayne Manufacturing Company has four operating divisions. During the first quarter of 2016, the company reported the divisional results shown below and aggregate income shown below Aggregate Income Division: North South East West 368,072$ 216,513 43,303 108,257 $ 223,730$ 194,862 46,912 (18,043) $ 281,467$ Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations 180,428 57,737 43,303 $ 129,908 108,257 50,520 (28,868)$ 1 104,649 Analysis reveals the following percentages of variable costs in each division. Division: North South East West Cost of goods sold Selling and administrative expenses 80% 50% 75% 65% 90% 40% 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 (East and West). Consensus is that one or both of the divisions should be discontinued. Instructions Your solutions should be clearly labeled on Solutions of this workbook. (a) Compute the contribution margin for the East and West Divisions. (See illustration 20-17 for guidance, if needed.) (b) Prepare an incremental analysis concerning the possible discontinuance of (1) East Division and (2) West Division. What course of action do you recommend for each division? Should either be closed? (See illustration 20-18 for guidance, if needed.) (c) Prepare a columnar condensed income statement for Wayne Manufacturing, assuming the division(s) that should be eliminated are eliminated. Use the CVP format. Remember: Closed division's unavoidable fixed costs are allocated equally to the continuing divisions. (See Illustrations 20-16 and 20-17 for guidance, if needed.)

Explanation / Answer

(a)

Working:

(b)

(c)

East West Contribution margin (%) 21.05% -2.22%

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