Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable Following is the
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Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable Following is the income statement for the previous year:
Granite | Lime | Nina | Total | ||||||||||
Sales | $ | 509,000 | $ | 273,000 | $ | 226,000 | $ | 1,008,000 | |||||
Variable Costs | 175,000 | 124,300 | 100,300 | 399,600 | |||||||||
Contribution Margin | 334,000 | 148,700 | 125,700 | 608,400 | |||||||||
Fixed Costs (allocated) | 275,000 | 166,250 | 103,750 | 545,000 | |||||||||
Profit Margin | $ | 59,000 | $ | (17,550 | ) | $ | 21,950 | $ | 63,400 | ||||
a. What would Rock’s profit margin be if the Lime division were dropped?
b. What would Rock’s profit margin be if the Nina division were dropped?
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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