Duncan Inc. has two divisions, Parker and Ginobili. Following is the income stat
ID: 2569211 • Letter: D
Question
Duncan Inc. has two divisions, Parker and Ginobili. Following is the income statement for the past month:
Parker
Ginobili
Sales
$
760,700
$
312,100
Variable Costs
288,200
196,700
Contribution Margin
$
_____________
$
___________
Fixed Costs (allocated)
238,900
173,800
Profit Margin
$
____________
$
_________
What would Duncan's profit margin be if the Ginobili division was dropped?
Parker
Ginobili
Sales
$
760,700
$
312,100
Variable Costs
288,200
196,700
Contribution Margin
$
_____________
$
___________
Fixed Costs (allocated)
238,900
173,800
Profit Margin
$
____________
$
_________
Explanation / Answer
Duncan inc profit was $175200 (sum of both divisions), but if ginobili division is dropped then it will be $59800 ( profit of Parker division $233600- allocated fixed cost of ginobili division 173800).
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