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Geno's Body Shop had sales revenues and operating costs in 2016 of $650,000 and $525,000, respectively
Geno's Body Shop had sales revenues and operating costs in 2016 of $650,000 and $525,000, respectively. In 2017, Geno's plans to expand the services it provides to customers to include detailing services. Revenues are expected to increase by $85,000 and operating costs by $50,000 as a result of this expansion. Assuming that there are no changes to the existing body shop business, what is the amount of operating profits that are expected be earned in 2017?
A. $125,000
B. $85,000
C. $160,000
D. $35,000
Expert Solution
answer---------------(C) $160,000
Working
| Revenue (650000+85000) | $ 735,000 |
| Less: operating expenses (525000+50000) | $ (575,000) |
| Operating income (735000-575000) | $ 160,000 |
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