The Kiddo Company manufactures and ships children's stuffed animals across the nation. The following are profit statements for the company's two lines of business:

Stock Stuffed Animals Custom Stuffed Animals Sales $7,500,000 $5,000,000 Less direct costs 2,500,000 4,000,000 Less allocated costs 3,375,000 1,125,000 Income (loss) before taxes $1,625,000 ($ 125,000)