Question
5) A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue
5) A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $15,000 $9400 $24,400 Variable cost (7000) (9800) (16,800) Fixed cost (allocated) (3000) (2100) (5100) Operating income (loss) $5000 $(2500) $2500 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product B is dropped, what would be the impact on total operating income of the company? A) increases by $2100 B) increases by $400 C) decreases by $2100 D) decreases by $400
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