QUESTION 30
Market Inc. has two divisions, Talbot and Heather. Following is the income statement for the past month:
Sales
Variable Costs
Contribution Margin
Fixed Costs (allocated)
Profit Margin
Talbot
Heather
Total
$ 292,800 $ 195,200
$ 488,000
199,960
39,040
239,000
92,840
156,160
249,000
100,380
66,920
167,300
$ (7,540) $ 89,240
$ 81,700
What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable?
$7,540 loss
$11,140 loss
$89,240 profit
$249,000 profit