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A company currently has two product lines and is considering dropping Product 456. Product 123 Product 456 Total Sales revenue $20,000 $10,000 $30,000 Cost of
A company currently has two product lines and is considering dropping Product 456. Product 123 Product 456 Total Sales revenue $20,000 $10,000 $30,000 Cost of goods sold (all variable) $5,000 $4,000 $9,000 Contribution margin $15,000 $6,000 $21,000 Fixed costs* $9,000 $8,000 $17,000 Operating Profit (Loss) $6,000 ($2,000) $4,000 If Product 456 is dropped, $5,000 of its total fixed costs will be saved; the remaining $3,000 will continue. Based on this information, dropping Product 456 will Blank______. Multiple choice question. decrease total operating profit by $5,000 increase total operating profit by $2,000 increase total operating profit by $5,000 decrease total operating profit by $1,000
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