3.57 points Rock Inc. has three divisions, Granite, Lime and Nina. All fixed cos

Question

3.57 points Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable Following is the income statement for the previous year: 511,000 275,000 $ 229,000 $1,015,000 176,000 124,600 100,800 401400 Sales Variable Costs Contribution Margin Fixed Costs (allocated Profit Margir 335,000 150,400128,200 613,600 263,000 170,250107,750 541,000 72,000 (19,850) 20,450 72,600 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?

Explanation / Answer

a) Rock's profit margin if lime division wass dropped :

a) Rock's profit margin if Nina division wass dropped :

Contribution margin of rock if lime division dropped (335000+1282000 463200 Less: Fixed cost (541000) Profit margin of rock after lime division dropped (77800)

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