Question
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
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?
Step by Step Solution
3.27 Rating (156 Votes )
There are 3 Steps involved in it
Step: 1
a Current profit margin 63400 Add Loss on from Lime division 1755...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Horngrens Financial and Managerial Accounting
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
5th edition
9780133851281, 013385129x, 9780134077321, 133866297, 133851281, 9780133851298, 134077326, 978-0133866292
