Katrina Products€™ general manager worries about the company€™s performance. She segmented the company€™s income statement product by product and obtained the following picture:

Should the company drop Product C, given that doing so would eliminate Product C€™s sales and variable costs and reduce the company€™s total fixed costs by only $5,000? Dropping Product C would have no effect on the profits from Products A andB.

Transcribed Image Text:

Product Sales Less Variable Costs Total Contribution Margin Less Fixed Costs Allocated to Each Product Net Operating Profit (Loss) $20,000 $30,000 38,000 15,000 22,000 34,000 5,000 8,000 4,000 3,000 . 5,000 7,000 5 20000 5 3.000 53000)