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Rock Incorporated has three divisions, Granite, Lime and Nina. All fixed costs are common and unavoidable. Following is the income statement for the previous year:
Rock Incorporated has three divisions, Granite, Lime and Nina. All fixed costs are common and unavoidable. Following is the income statement for the previous year:
Granite | Lime | Nina | Total | |
---|---|---|---|---|
Sales revenue | $ 514,000 | $ 274,000 | $ 226,000 | $ 1,014,000 |
Variable costs | 178,000 | 124,300 | 100,400 | 402,700 |
Contribution/segment margin | $ 336,000 | $ 149,700 | $ 125,600 | $ 611,300 |
Common fixed costs (allocated) | 267,000 | 153,250 | 121,750 | 542,000 |
Net operating income (loss) | $ 69,000 | $ (3,550) | $ 3,850 | $ 69,300 |
Required:
- What would Rock's income (loss) be if the Lime Division were dropped?
- What would Rock's income (loss) be if the Nina Division were dropped?
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