Question

Problem 20-05A a, b1-b3, c (Part Level Submission)

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $212,000 and the following divisional results.

		Division
		I		II		III		IV
Sales		$246,000		$195,000		$498,000		$452,000
Cost of goods sold		198,000		192,000		304,000		247,000
Selling and administrative expenses		77,000		54,000		56,000		51,000
Income (loss) from operations		$ (29,000)		$ (51,000)		$138,000		$154,000

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

		I			II			III			IV
Cost of goods sold		73	%		92	%		77	%		79	%
Selling and administrative expenses		41			60			48			62

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.

(a)

	Your answer is incorrect. Try again.

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		$		$

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Answer 1

a
	Division I	Division II
Contribution margin	69890	-14040
Workings:
	Division I	Division II
Sales	246000	195000
Less: Variable Cost of goods sold	144540	176640
Less: Variable Selling and administrative expenses	31570	32400
Contribution margin	69890	-14040
	Division I	Division II
Variable Cost of goods sold	=198000*73%	=192000*92%
Variable Selling and administrative expenses	=77000*41%	=54000*60%