Wildhorse Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $214,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations I $249,000 199,000 76,000 || Division $200,000 192,000 63,000 $ (26,000) $ (55,000) ||| $504,000 $450,000 296,000 64,000 $144,000 IV Analysis reveals the following percentages of variable costs in each division. 249,000 50,000 $151,000 Cost of goods sold Selling and administrative expenses I (a) 74 % 39 || 88 % 60 ||| 79 % 51 IV 74 % 61 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).) (a) 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).) Contribution margin $ Division I $ Division II Prepare an incremental analysis concerning the possible discontinuance of Division I. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ Continue $ $ Eliminate $ $ Net Income Increase (Decrease) Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ Continue $ $ Eliminate $ tA $ Net Income Increase (Decrease) (b3) What course of action do you recommend for each division? Division I Division II > Prepare a columnar condensed income statement for Wildhorse 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 preceding the number e.g. -45 or parentheses e.g. (45).) Sales Variable costs Cost of goods sold Selling and administrative Total variable costs $ | WILDHORSE COMPANY CVP Income Statement For the Quarter Ended March 31, 2022 Divisions $ ||| $ IV Contribution margin Fixed costs Cost of goods sold ◄ Selling and administrative Total fixed costs Income (loss) from operations $ $ Total
