Reference no: EM13608772

Judy Herzog, a recent graduate of Rolling's accounting program, evaluated the operating performance of Klumpe Company's six divisions. Judy made the following presentation to Klumpe Board of Directors and suggested the Ketchum Division be eliminated. "If the Ketchum Division is eliminated," she said, "our total profits would increase by $16,870". The Other Five Divisions Ketchum Division Total Sales $1,664,200 $98,200 $1,762,400 Cost of goods sold 978,520 76,470 1,054,990 Gross profit 685,680 21,730 707,410 Operating expenses 527,940 38,600 566,540 Net income $157,740 $(16,870) $140,870 In the Ketchum 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 Ketchum Division's fixed costs will be eliminated if the division is discontinued. Instructions Is Judy right about eliminating the Ketchum Division? Complete the following incremental analysis to support your answer. (If an amount should be blank, enter a zero. All boxes must be filled to be correct. If amount decreases net income, use either a negative sign preceding the number eg -45 or parentheses eg (45). If a net loss, record amount using either a negative sign preceding the number eg -45 or parentheses eg.