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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$ 511,000 $
274,000 $ 230,000 $ 1,015,000 Variable Costs 181,000 124,800 100,800 406,600 Contribution
Margin 330,000 149,200 129,200 608,400 Fixed Costs (allocated) 261,000 168,250 104,750
534,000 Profit Margin 69,000 (19,050) 24,450 74,400
a. What would Rock’s profit margin be if the Lime division was dropped
What would Rock’s profit margin be if the Nina division was dropped?b.
What would Rock’s profit margin be if the Nina division was dropped?
Solution
a. What would Rock’s profit margin be if the Lime division was dropped
Rock’s profit margin be if the Lime division was dropped = - $ 74800
Working
b.What would Rock’s profit margin be if the Nina division was dropped?
Rock’s profit margin be if theNinadivision was dropped = - $ 54800
WorkingGraniteLimeNinaTotalSales5110000230000741000Variable
Costs1810000100800281800Contribution Margin3300000129200459200Fixed Costs
(allocated)261000168250104750534000Margin69000-16825024450-74800

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

  • 1. 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$ 511,000 $ 274,000 $ 230,000 $ 1,015,000 Variable Costs 181,000 124,800 100,800 406,600 Contribution Margin 330,000 149,200 129,200 608,400 Fixed Costs (allocated) 261,000 168,250 104,750 534,000 Profit Margin 69,000 (19,050) 24,450 74,400 a. What would Rock’s profit margin be if the Lime division was dropped What would Rock’s profit margin be if the Nina division was dropped?b. What would Rock’s profit margin be if the Nina division was dropped? Solution a. What would Rock’s profit margin be if the Lime division was dropped Rock’s profit margin be if the Lime division was dropped = - $ 74800 Working b.What would Rock’s profit margin be if the Nina division was dropped? Rock’s profit margin be if theNinadivision was dropped = - $ 54800 WorkingGraniteLimeNinaTotalSales5110000230000741000Variable Costs1810000100800281800Contribution Margin3300000129200459200Fixed Costs (allocated)261000168250104750534000Margin69000-16825024450-74800