Problem 20-5A (Part Level Submission) Brislin Company has four operating divisio

Question

Problem 20-5A (Part Level Submission) Brislin Company has four operating divisions. During the first quarter of 2017, the companyy reported aggregate income from operations of $207,400 and the following divisional results DIvision Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $249,000 $200,000 $498,000 $446,000 192,000 305,000 248,000 45,000 $ (27,600) $(52,000) $134,000 $153,000 205,000 71,600 60,000 59,000 Analysis reveals the following percentages of variable costs in each division. IV 74 % 59 Cost of goods sold 68 % 88 % 81% Selling and administrative expenses 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 (I and II). Consensus is that 59 47 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

Explanation / Answer

(a)

Division I Division II Sales $249,000 $200,000 Variable costs Cost of goods sold($205,000 × 68%);($192,000 × 88%) $139,400 $168,960 Selling and administrative($71,600 × 40%);($60,000 × 59%) $28,640 $35,400 Total variable expenses $168,040 $204,360 Contribution margin $80,960 -$4,360

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