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Assuming the sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $32,000 per year.
1. Add the operating income from luxury watches (or whatever is NOT being eliminated!) and the rented amount per year.
2. Subtract the number of fixed expenses from that number.
3. Subtract the operating income of the total from that number.
Operating profit refers to the company's adjusted earnings after deducting all operating expenses and depreciation. Operating expenses or operating expenses are income the costs incurred to keep a business running.
Operating profit (also known as operating profit) refers to the gross income earned by a company from its core operations, before deducting taxes and interest. The operating profit metric represents the remaining revenue after deducting direct and indirect costs from sales revenue. The company's operating income is $1 million minus $250,000 or $750,000. June 14, 2022
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