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# Incremental contribution margin

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I am working on cost analysis and got stuck on the incremental contribution margin. It's number 2 in the worksheet attached. I put my notes of what I was trying to do next to the line items.

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2. Incremental contribution margin:
Increased sales \$24,000 (Contribution on Increased ...

#### Solution Summary

This solution provides students with a brief explanation of how to determine the incremental contribution margin, using information in a provided Excel spreadsheet. The expert provides equation and brief text explanation.

\$2.19

## Contribution margin, incremental analysis, income statement

See attached file.

Lewis Manufacturing Company has four operating divisions. During the first quarter of 2005, the company reported aggregate income from operations of \$176,000 and following division results. See attachment.

Instructions

a. Computer the contribution margin for divisions I and II?
b. Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action do you recommend for each division?
c. Prepare a columnar condensed income statement for Lewis Manufacturing, assuming Division II is eliminated. Use the CVP format. Division II's unavoidable fixed cost are allocated equally to the continuing divisions.
d. Reconcile the total income from operations (\$176,000) with the total income from operations without Division II.

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