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Veronica Mars, a recent graduate of Bell€™s accounting program, evaluated the operating performance of Dunn Company€™s six divisions. Veronica made the following presentation to Dunn€™s board of directors and suggested the Percy Division be eliminated. €œIf the Percy Division is eliminated,€ she said, €œour total profits would increase by $26,000.€
Veronica Mars, a recent graduate of Bell€™s accounting program, evaluated
In the Percy Division, cost of goods sold is $61,000 variable and $15,000 fixed, and operating expenses are $30,000 variable and $20,000 fixed. None of the Percy Division€™s fixed costs will be eliminated if the division is discontinued.
Instructions
Is Veronica right about eliminating the Percy Division? Prepare a schedule to support youranswer.
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