In 2010,the Turnkey Company had consulting revenues of $1,000,000 while costs were $750,000.In 2011,Turnkey will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in costs.Assuming no changes are expected for the other services,the differential operating profit for 2011 is

Question

Quizplus · Accepted Answer

To calculate the differential operating profit for 2011, we need to subtract the costs from the revenues.

For 2010:

Operating profit = Revenues - Costs 
Operating profit = $1,000,000 - $750,000 
Operating profit = $250,000

For 2011:

Operating profit = Revenues - Costs 
Operating profit = ($1,000,000 + $150,000) - ($750,000 + $60,000) 
Operating profit = $1,150,000 - $810,000 
Operating profit = $340,000

Now, to find the differential operating profit, we need to subtract the 2010 operating profit from the 2011 operating profit:

Differential operating profit = 2011 operating profit - 2010 operating profit 
Differential operating profit = $340,000 - $250,000 
Differential operating profit = $90,000

Therefore, the correct answer is C) $90,000.

In 2010,the Turnkey Company Had Consulting Revenues of $1,000,000 While