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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 $26,340."

	The Other Five Divisions	Huron Division	Total
Sales	$1,663,440	$100,220	$1,763,660
Cost of goods sold	977,660	76,950	1,054,610
Gross profit	685,780	23,270	709,050
Operating expenses	528,030	49,610	577,640
Net income	$ 157,750	$ (26,340)	$ 131,410

In the Huron Division, cost of goods sold is $60,600 variable and $16,350 fixed, and operating expenses are $24,700 variable and $24,910 fixed. None of the Huron Division's fixed costs will be eliminated if the division is discontinued.

Prepare an incremental analysis.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92719554

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