DIVISION B OF DILLARD, INC. Income Statement For the Year Ended December 31, 2018 Product Line T205 B179 Total Net Sales Revenue $ 310,000 $ 360,000 $ 670,000 Cost of Goods Sold: Variable 31,000 44,000 75,000 Fixed 275,000 67,000 342,000 Total Cost of Goods Sold 306,000 111,000 417,000 Gross Profit 4,000 249,000 253,000 Selling and Administrative Expenses: Variable 68,000 80,000 148,000 Fixed 47,000 27,000 74,000 Total Selling and Administrative Expenses 115,000 107,000 222,000 Operating Income (Loss) $ (111,000) $ 142,000 $ 31,000
DIVISION B OF DILLARD, INC. Income Statement For the Year Ended December 31, 2018 Product Line T205 B179 Total Net Sales Revenue $ 310,000 $ 360,000 $ 670,000 Cost of Goods Sold: Variable 31,000 44,000 75,000 Fixed 275,000 67,000 342,000 Total Cost of Goods Sold 306,000 111,000 417,000 Gross Profit 4,000 249,000 253,000 Selling and Administrative Expenses: Variable 68,000 80,000 148,000 Fixed 47,000 27,000 74,000 Total Selling and Administrative Expenses 115,000 107,000 222,000 Operating Income (Loss) $ (111,000) $ 142,000 $ 31,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...
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The division manager of Division B received the following operating income data for the past year:
The manager of the division is surprised that the T205 product line is not profitable. The division accountant estimates that dropping the T205 product line will decrease fixed cost of goods sold by $75,000 and decrease fixed selling and administrative expenses by $10,000.
- Prepare a differential analysis to show whether Division B should drop the T205 product line.
- What is your recommendation to the manager of Division B?
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