Question

Crane 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		$19,200		$6,750			$25,950
Variable expenses		4,850		2,990			7,840
Contribution margin		14,350		3,760			18,110
Fixed expenses		2,990		4,200			7,190
Operating income		$ 11,360		$(440)			$ 10,920

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?

Operating income without round

Answer 1