Question
Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable. Following is the income statement for the previous year: Sales
Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable. Following is the income statement for the previous year: Sales Granite Line $507,000 Nina $270,000 $227,000 Total $1,004,000 Variable Costs 179,000 125,000 100,200 404,200 Contribution Margin 328,000 145,000 126,800 599,800 Fixed Costs (allocated) 274,000 157,250 114,750 546,000 Profit Margin $ 54,000 $ (12,250) $ 12,050 $ 53,800 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?
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