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Solomon Manufacturing Company produces and sells specialized equipment used in the petroleum industry. The company is organized into three separate operating branches: Division A which manufactures and sells heavy equipment; Division B, which manufactures and sells hand tools; and Division C, which makes and sells electric motors. Each division is housed in a separate manufacturing facility. Company headquarters is located in a separate building. In recent years, Division B has been operating at a net loss and is expected to continue to do so. Income statements for the three divisions for Year 2 follow. Required Q-1. Based on the preceding information, recommend whether to elliminate Division B. a-2. Prepare company-wide income statements before and after eliminating Division B. b. During Year 2. Division B produced and sold 25,000 units of hand tools. Calculate the contribution to profit if sales and production increase to 33,000 units in Year 3, Should Division B be eliminated? c. Suppose that Solomon could sublease Division B's manufacturing facility for $410,000 or operate Division B at a production and sales volume of 33,000 units. Determine Division B's contribution margin at that level. Based on your determination, would you operate Division B or close it? Complete this question by entering your answers in the tabs below

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