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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
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 | $ | 506,000 | $ | 272,000 | $ | 226,000 | $ | 1,004,000 | |||||
| Variable Costs | 182,000 | 124,200 | 100,700 | 406,900 | |||||||||
| Contribution Margin | 324,000 | 147,800 | 125,300 | 597,100 | |||||||||
| Fixed Costs (allocated) | 258,000 | 155,250 | 106,750 | 520,000 | |||||||||
| Profit Margin | $ | 66,000 | $ | (7,450 | ) | $ | 18,550 | $ | 77,100 | ||||
a. What would Rocks profit margin be if the Lime division were dropped?
b. What would Rocks profit margin be if the Nina division were dropped?
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