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Problem 20-05A a, b1-b3, c (Video) Sandhill Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $216,600 and the following divisional results. Division I II III IV Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $253,000 197,000 69,400 $195,000 195,000 63,000 $501,000 296,000 61,000 $447,000 250,000 48,000 $ (13,400) $ (63,000) $144,000 $149,000 Analysis reveals the following percentages of variable costs in each division. I II III IV 72 % 89 % 79 % 76 % Cost of goods sold Selling and administrative expenses 40 57 52 59 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. 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 $ Prepare an incremental analysis concerning the possible discontinuance of Division I. (Enter negative amounts using either a negative sign Net Income Increase (Decrease) Continue Eliminate Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign Net Income Increase (Decrease) Continue Eliminate Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ What course of action do you recommend for each division? Division I Division II Prepare a columnar condensed income statement for Sandhill Company, assuming Division II is eliminated. Division II's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter negative amounts using either a negative sign parentheses e.g. (45).) SANDHILL COMPANY CVP Income Statement For the Quarter Ended March 31, 2020 Divisions I III IV Total Sales $ $ $ $ Variable costs Cost of goods sold Selling and administrative Total variable costs Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed costs Income (loss) from operations $

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