Milwaukee, Inc

question 75

Essay

Milwaukee, Inc. has three divisions: Bud, Wise, and Er. The results of May, 2010 are presented below.
All of the allocated costs will continue even if a division is discontinued. Milwaukee allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Milwaukee feels that it should be discontinued. Milwaukee feels if the division is closed, that sales at the Bud division will increase by 10%, and that sales at the Er division will stay the same.
Instructions
(a) Prepare an analysis showing the effect of discontinuing the Wise division.
(b) Should Milwaukee close the Wise division? Briefly indicate why or why not.

---

Definitions:

Good Faith

A sincere intention to deal fairly with others without any intention to defraud or seek an unfair advantage.

Duty Of Obedience

The legal or ethical obligation of individuals to act in accordance with the laws, rules, or regulations that govern their behavior or role, particularly in organizational or fiduciary contexts.

Authorized Contract

An authorized contract is a legal agreement that has been approved and executed by individuals or entities who have the legal capacity and authority to do so.

Tort

A civil wrong that causes harm or loss, leading to legal liability.