Question
A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $ 16
A company has two different products that are sold in different markets. Financial data are as follows:
Product A | Product B | Total | |
Revenue | $ 16 comma 000$16,000 | $ 9 comma 300$9,300 | $ 25 comma 300$25,300 |
Variable cost | (8 comma 0008,000) | (9 comma 9009,900) | (17 comma 90017,900) |
Fixed cost (allocated) | (1 comma 0001,000) | (2 comma 1002,100) | (3 comma 1003,100) |
Operating income (loss) | $ 7 comma 000$7,000 | $(2 comma 7002,700) | $ 4 comma 300$4,300 |
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 $600
B. decreases by $600
C. increases by $2,100
D. decreases by $2,100
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started