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Posted by: Homeworkhelp
Price Quoted by Student: $7
Posted On: 2016-03-22 07:07:40
 
Question
Judy Jean, a recent graduate of Rolling's accounting program
 
 
E7-15 Judy Jean, a recent graduate of Rolling's accounting program, evaluated the operating performance of Artie Company's six divisions. Judy made the following presentation to Artie's Board of Directors and suggested the Huron Division be eliminated. "If the Huron Division is eliminated," she said, "our total profits would increase by $24,500.
The Other Five Divisions 
Huron Division
Total 
Sales
$1,664,200
$100,000
$1,764,200
Cost of goods sold
978,520
76,000
$1,054,520
Gross profit
685,680
24,000
$709,680
Operating expenses
527,940
50,000
$577,940
Net income
$157,740
($26,000)
$131,740

In the Huron Division, cost of goods sold is $61,000 variable and $15,000 fixed, and operating expenses are $26,000 variable and $24,000 fixed. None of the Huron Division's fixed costs will be eliminated if the division is discontinued.



Instructions
Is Judy right about eliminating the Huron Division? Prepare a schedule to support your answer.

TUTORIAL PREVIEW
Is Judy right about eliminating the Huron Division? Prepare a schedule to support your answer.

Net Income
Increase
(Decrease)
Continue
Eliminate
Sales
$100,000
$0
($100,000)
Variable expenses
Cost of goods sold
61,000
0
61,000
Operating expenses
26,000
0
26,000

 

Solutions
Instructions:
Price $7
Attachment 1: E7-15 Judy Jean.xls
Solution Posted By: Homeworkhelp    Posted on: 22-03-2016