9. Twinkie 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 $ 80.000 $ 50.000 $ 130,000 Variable expenses $ 28,000 $ 40,000 $ 68,000 Contribution margin $ 52.000 $10.000 $ 62,000 Fixed expenses $12.000 $12.000 $ 24,000 Operating incone $40.000 $2,000 S 38,000
Thirty 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?
10. Because of limited production capacity a small electronics company needs to prioritize the production of the two most profitable products. The controller has provided the following information:
Product A Product B Product C Contribution Margin per package $75.00 $45.00 $30.00 Machine hours per package 5 3 2
Which product should be eliminated to maximize profit? a.Product A b.Product B C. Product C d.It does not make any difference since they are contributing equally
