Geno's Body Shop had sales revenues and operating costs in 2020 of $650,000 and $525,000, respectively. In 2021, Geno 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, operating profits would be expected to increase during 2021 by:

Question

Quizplus · Accepted Answer

Operating profits are calculated as revenues minus operating costs. The increase in operating profits is the increase in revenues ($85,000) minus the increase in operating costs ($50,000), which equals $35,000.

Geno's Body Shop Had Sales Revenues and Operating Costs in 2020