After reviewing the company's performance, the general manager of Compass Distributing, Inc. must address the firm's profitability. Presently the company has 20% excess capacity. (All fixed costs are allocated costs.)

Segment	North	South	East	West
Sales	10	45	50	20
Less: variable costs	12	32	33	19
Contribution margin	(2)	13	17	1
Less: fixed costs	1	11	13	5
Operating profit (loss)	(3)	2	4	(4)

REQUIRED:

a.	For the company as a whole,what is the current operating profit (loss) ?
b.	If the manager eliminated the unprofitable segments, what would be the new operating profit (loss) for the company as a whole?
c.	What combination of segments will maximize profits? What would be that new operating profit (loss) for the company as a whole?

Answer rating: 100% (QA)

Answer of all parts are given below For the Company as a whole a Sales 125 Less VC ... View the full answer