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4. Freezer Treats produces three flavors of ice cream, one of which is not generating satisfactory profits. Information on the three flavors is as follows:
4. Freezer Treats produces three flavors of ice cream, one of which is not generating satisfactory profits. Information on the three flavors is as follows: + Chocolate Vanilla Sales $400,000 $525,000 Grape $75,000 Total $1,000,000 Variable costs 280,000 365,000 Contribution $120,000 $160,000 52,000 $23,000 697,000 $303,000 280,000 margin Allocated fixed 100,000 125,000 25,000 250,000 238000 costs Operating income $20,000 $35,000 ($2,000) $53,000 42,000 If Freezer Treats eliminates Grape, they can reduce fixed costs by $12,000 by eliminating some equipment. How much will Farmer's profit change if Grape is eliminated? A. $2,000 increase B. $14,000 increase C. $11,000 decrease D. $21,000 decrease
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