Question

In 2020, the TransUnion Company had consulting revenues of $1,130,000 while costs were $710,000. In 2021, TransUnion will be introducing a new service that will generate $215,000 in sales revenues and $73,000 in costs. Assuming no changes are expected for the other services, operating profits are expected to increase between 2020 and 2021 by:

A. 420,000
B. $215,000
C. $142,000
D. $73,000

Answer 1

The operating profit will increase by $142000

Step-by-step explanation:

The change or increase in operating profits will be because of the profit generated by the new service. The operating profit is the difference between a company's sales revenue and all related costs except for non operating and financing costs.

The costs given here are expected to all be operating expenses. Thus, the operating profits will increase by:

Increase in Operating profit = 215000 - 73000 = $142000