Determine the profitability of the remaining services


An insurance company has the following profitability analysis of its services:

Life Insurance Auto Insurance Home Insurance

Revenues $5,000,000 $10,000,000 $3,000,000
Commissions ($1,000,000) ($2,000,000) ($600,000)
Payments ($3,000,000) ($7,300,000) ($2,000,000)
Fixed Costs ($500,000) ($500,000) ($500,000)
Profit $500,000 $200,000 ($100,000)

The fixed costs are distributed equally among the services and are not avoided if one of the services is dropped

What is the profitability of the remaining services if all services with losses are dropped?

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Accounting Basics: Determine the profitability of the remaining services
Reference No:- TGS055993

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