Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable. Following is...

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	$	513,000		$	273,000			$	226,000	$	1,012,000
Variable Costs		186,000			124,200				100,200		410,400
Contribution Margin		327,000			148,800				125,800		601,600
Fixed Costs (allocated)		270,000			164,250				122,750		557,000
Profit Margin	$	57,000		$	(15,450	)		$	3,050	$	44,600

a. What would Rock’s profit margin be if the Lime division were dropped?

b. What would Rock’s profit margin be if the Nina division were dropped?

Expert Solution

ekkarill92 answered 2 years ago

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