Novak Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $200,300 and the following divisional results. Division
I II III IV
Sales $253,000 $198,000 $495,000 $447,000
Cost of goods sold 198,000 190,000 303,000 254,000
Selling and administrative expenses 74,700 65,000 56,000 52,000
Income (loss) from operations $(19,700) $(57,000) $136,000 $141,000

Analysis reveals the following percentages of variable costs in each division.

I II III IV
Cost of goods sold 68% 90% 79% 75%
Selling and administrative expenses 37 60 49 61

Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.

Required:
Prepare a columnar condensed income statement for Novak Company, assuming Division II is eliminated. Division II’s unavoidable fixed costs are allocated equally to the continuing divisions.