Question
8.17 (LO 5) Keeping or eliminating operations Twinkie Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game.
8.17 (LO 5) Keeping or eliminating operations Twinkie Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarters operating profits, by product, and for the company as a whole, were as follows:
Square Round Total
Sales revenue $11,000 $6,600 $17,600
Variable expenses 4,400 3,000 7,400
Contribution margin 6,600 3,600 10,200
Fixed expenses 2,750 4,200 6,950
Operating income $3,850 $(600) $3,250
Forty percent of the Round Games fixed costs could have been avoided if the game had not been produced or sold.
Required
If the Round Game had been discontinued before the last quarter, what would operating income have been for the company as a whole?
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