Judy jean, a recent graduate of rolling’s accounting program,

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E7-15 Judy Jean, a recent graduate of Rolling’s accounting program, evaluated the operating performance of Artie Company’s six divisions. Judy made the following presentation to Artie’s Board of Directors and suggested the Huron Division be eliminated. “If the Huron Division is eliminated,” she said, “our total profits would increase by $24,500.

	The Other Five Divisions	Huron Division	Total
Sales	$1,664,200	$100,000	$1,764,200
Cost of goods sold	978,520	76,000	$1,054,520
Gross profit	685,680	24,000	$709,680
Operating expenses	527,940	50,000	$577,940
Net income	$157,740	($26,000)	$131,740

In the Huron Division, cost of goods sold is $61,000 variable and $15,000 fixed, and operating expenses are $26,000 variable and $24,000 fixed. None of the Huron Division’s fixed costs will be eliminated if the division is discontinued.

Instructions
Is Judy right about eliminating the Huron Division? Prepare a schedule to support your answer.

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