ABCDE Inc. has three divisions: AB, CD, and E. All fixed costs are unavoidable. Following is the income statement for the previous year: AB CD E Total Sales $ 515,000 $ 274,500 $ 226,000 $ 1,015,500 Variable Costs 182,000 124,500 100,500 407,000 Contribution Margin 333,000 150,000 125,500 608,500 Fixed Costs (allocated) 272,000 165,250 112,750 550,000 Profit Margin $ 61,000 $ (15,250 ) $ 12,750 $ 58,500 a. What would company’s profit margin be if the CD division were dropped?
ABCDE Inc. has three divisions: AB, CD, and E. All fixed costs are unavoidable. Following is the income statement for the previous year: AB CD E Total Sales $ 515,000 $ 274,500 $ 226,000 $ 1,015,500 Variable Costs 182,000 124,500 100,500 407,000 Contribution Margin 333,000 150,000 125,500 608,500 Fixed Costs (allocated) 272,000 165,250 112,750 550,000 Profit Margin $ 61,000 $ (15,250 ) $ 12,750 $ 58,500 a. What would company’s profit margin be if the CD division were dropped?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABCDE Inc. has three divisions: AB, CD, and E. All fixed costs are unavoidable. Following is the income statement for the previous year:
AB CD E Total
Sales $ 515,000 $ 274,500 $ 226,000 $ 1,015,500
Variable Costs 182,000 124,500 100,500 407,000
Contribution Margin 333,000 150,000 125,500 608,500
Fixed Costs (allocated) 272,000 165,250 112,750 550,000
Profit Margin $ 61,000 $ (15,250 ) $ 12,750 $ 58,500
a. What would company’s profit margin be if the CD division were dropped?
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