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E6-10 Maggie Sharrer, a recent graduate of Rolling's accounting program, evaluated

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E6-10 Maggie Sharrer, a recent graduate of Rolling's accounting program, evaluated;the operating performance of Poway Company's six divisions. Maggie made the following;presentation to Poway's Board of Directors and suggested the Erie Division be eliminated.;If the Erie Division is eliminated," she said, "our total profits would increase;by $24,500.;The Other Erie;Five Divisions Division Total;Sales $1,664,200 $100,000 $1,764,200;COGS 978,520 76,500 1,055,020;Gross profit 685,680 23,500 709,180;Oper.expenses 527,940 48,000 575,940;Net income $ 157,740 $ (24,500) $ 133,240;In the Erie Division, cost of goods sold is $60,000 variable and $16,500 fixed, and operating expenses are $25,000 variable and $23,000 fixed.;None of the Erie Division's fixed costs will be eliminated if the division is discontinued.;Instructions;Is Maggie right about eliminating the Erie Division? Prepare a schedule to support your answer.

 

Paper#25503 | Written in 18-Jul-2015

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