Reference no: EM131204862
Physical Phitness, Inc., operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. “Survival of the fittest, I say!” was his response when the Weak division’s manager insisted that his division earned money for the company. Following is the most recent financial analysis for each division: Weak Average Strong Sales $126,000 $345,800 $527,500 Variable expenses 56,600 197,900 306,600 Contribution margin 69,400 147,900 220,900 Direct expenses 30,300 78,200 114,100 Allocated expenses 53,500 53,500 53,500 Operating income $(14,400 ) $16,200 $53,300 Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming weak was dropped?
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Weak division has the lowest operating income
: Physical Phitness, Inc., operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. “Survival of the fittest, I say!” was his response when the Weak di..
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Company generate annually in order for the business
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