Rock Inc. has three divisions, Granite, Lime and Nina All fixed costs are unavoi

Question

Rock Inc. has three divisions, Granite, Lime and Nina All fixed costs are unavoidable Following is the income statement for the previous year Sales Variable Costs 516,000 $ 275,000 $ 228,000 $1,019,000 190,000 124,700 100,500 415,200 Contribution Margin Fixed Costs (allocated) 326,000 150,300 127,500 603,800 274,000 163.250 7,750 555,000 Profit Margin 52,000 (12,950) 9,750 48,800 a. What would Rock's profit margin be if the Lime division was dropped? b. What would Rock's profit margin be if the Nina division was dropped? O Type here to search

Explanation / Answer

a) if company droped Lime division net income will decrease to $101,500

b) If compay droped Nina division, net income will decrease to $78,700

Total Sales   $1,019,000 - $275,000 = $744,000 Variable costs $415,200 - $124,700 = $290,500 Contribution margin $                                                  453,500 Fixed costs $                                                  555,000 Profit margin $                                                (101,500)

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.