Question

Geno's Body Shop had sales revenues and operating costs in 2020 of $740,000 and $570,000, respectively. In 2021, Geno plans to expand the services it provides to customers to include detailing services. Revenues are expected to increase by $103,000 and operating costs by $59,000 as a result of this expansion.
Required:
1. Assuming that there are no changes to the existing body shop business, operating profits would be expected to increase during 2021 by __________.

Answer 1

Answer:

$214,000

Explanation:

Total Revenues ($740,000 + $103,000) =$843,000

−Total Operating costs ($570,000 + $59,000)

=$629,000

= Total operating profit = $214,000

Therefore Assuming that there are no changes to the existing body shop business, operating profits would be expected to increase during 2021 by $214,000

Answer 2

Answer:

$97,100

Explanation:                                        

Increase in revenue                                 $103,000

Less: Increase in operating cost              $59,000

Increase in operating profit                       $97,100