Question
Twinkie Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarter's operating profits, by product, and
Twinkie Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarter's operating profits, by product, and for the company as a whole, were as follows:
Square
Round
Total
Sales revenue
$11,000
$6,600
$17,600
Variable expenses
4,400
3,000
7,400
Contribution margin
6,600
3,600
10,200
Fixed expenses
2,750
4,200
6,950
Operating income
$ 3,850
$(600)
$ 3,250
Forty percent of the Round Game's fixed costs could have been avoided if the game had not been produced or sold.
If the Round Game had been discontinued before the last quarter, what would operating income have been for the company as a whole?
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