Joe runs the Service Division for a car dealership. The overall dealership has profit of $10 million on sales of $100 million and costs of $90 million. Joe' s division contributed $9 million in sales and $7 million in costs. If the Service Division is evaluated as a profit center, what dollar amount is most relevant to Joe?

Question

Business

Claire Ortiz

24 July, 05:08

Joe runs the Service Division for a car dealership. The overall dealership has profit of $10 million on sales of $100 million and costs of $90 million. Joe' s division contributed $9 million in sales and $7 million in costs. If the Service Division is evaluated as a profit center, what dollar amount is most relevant to Joe?

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Answers (1)

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Rudy Jennings · Answer 1

The $2 million dollar amount is most relevant to Joe

Explanation:

Profit center: It is a center in which the amount is recorded as a profit which is to be calculated by subtracting the total cost from the revenue.

Since we have to compute the dollar amount as a profit center and we know the profit equals to

= Sales Revenue - total cost

So, = $9 million - $7 million = $2 million

The other items which are mentioned in the question are irrelevant. Hence, it is ignored