Business, 23.03.2020 19:34 purplefish53

Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $191,000 and the following divisional results.

Division
I II III IV
Sales $250,000 $198,000 $496,000 $443,000
Cost of goods sold 205,000 190,000 297,000 255,000
Selling and administrative expenses 70,000 64,000 61,000 54,000
Income (loss) from operations $ (25,000) $ (56,000) $138,000 $134,000

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

I II III IV
Cost of goods sold 69% 89% 80% 74%
Selling and administrative expenses 37 61 51 58

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.

Prepare a columnar condensed income statement for Pronghorn Company, assuming Division II is eliminated. Division II’s unavoidable fixed costs are allocated equally to the continuing divisions.

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Brislin Company has four operating divisions. During the first quarter of 2017, the company reported...