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The common costs are allocated as below, complete the calculation for divisional profit Bicycles Scooters Fitness Accessories Totals Revenue 110,500 246,100 78,300 95,600 530,500 Variable Costs (45,900) (113,700) (35,800) (54,400) 249,800 Fixed Costs (26,000) (30,000) (44,000) (13,000) 113,000 Divisional contribution Common Costs (6,500) (22,400) (19,100) (8,800) 56,800 Divisional Profit If All Wheels closes the fitness equipment division, what would be the effect on overall business profitability based on the information provided above? Provide calculations in the column provided
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The common costs are allocated as below, complete the calculation for divisional profit
|
|
Bicycles |
Scooters |
Fitness |
Accessories |
Totals |
|
|
Revenue
|
110,500 |
246,100 |
78,300 |
95,600 |
530,500 |
|
|
Variable Costs |
(45,900) |
(113,700) |
(35,800) |
(54,400) |
249,800 |
|
|
Fixed Costs
|
(26,000) |
(30,000) |
(44,000) |
(13,000) |
113,000 |
|
|
Divisional contribution |
|
|
|
|
|
|
|
Common Costs |
(6,500) |
(22,400) |
(19,100) |
(8,800) |
56,800 |
|
|
Divisional Profit |
|
|
|
|
|
|
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If All Wheels closes the fitness equipment division, what would be the effect on overall business profitability based on the information provided above? Provide calculations in the column provided.
-
Based on your calculations in part (a), do you recommend that the fitness equipment division be closed? Consider other factors that may influence the decision. Explain your answer.
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