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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 | $ | 505,000 | $ | 273,000 | $ | 230,000 | $ | 1,008,000 | |||||
| Variable Costs | 181,000 | 124,800 | 100,400 | 406,200 | |||||||||
| Contribution Margin | 324,000 | 148,200 | 129,600 | 601,800 | |||||||||
| Fixed Costs (allocated) | 257,000 | 171,250 | 121,750 | 550,000 | |||||||||
| Profit Margin | $ | 67,000 | $ | (23,050 | ) | $ | 7,850 | $ | 51,800 | ||||
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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