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

$97,100

Step-by-step explanation:

Increase in revenue $103,000

Less: Increase in operating cost $59,000

Increase in operating profit $97,100

Answer 2

$214,000

Step-by-step 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