Is Sara right about eliminating the Western Division

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Reference no: EM132800474

Question - Sara Casper, a recent graduate of Rolling's accounting program, evaluated the operating performance of Klumpe Company's six divisions. Sara made the following presentation to the Klumpe board of directors and suggested the Western Division be eliminated. "If the Western Division is eliminated," she said, "our total profits would increase by $16,870."

In the Western Division, cost of goods sold is $56,000 variable and $20,470 fixed, and operating expenses are $12,000 variable and $26,600 fixed. None of the Western Division's fixed costs will be eliminated if the division is discontinued.

Is Sara right about eliminating the Western Division? Prepare a schedule to support your answer.

Reference no: EM132800474

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