Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company has two different products that are sold in different markets. Financial data are asfollows: Product A Product B Total Revenue $ 17 comma

A company has two different products that are sold in different markets. Financial data are asfollows:

Product A

Product B

Total

Revenue

$ 17 comma 000

$17,000

$ 9 comma 300

$9,300

$ 26 comma 300

$26,300

Variable cost

(8 comma 000

8,000)

(9 comma 800

9,800)

(17 comma 800

17,800)

Fixed cost(allocated)

(2 comma 000

2,000)

(2 comma 200

2,200)

(4 comma 200

4,200)

Operating income(loss)

$ 7 comma 000

$7,000

$(2 comma 700

2,700)

$ 4 comma 300

$4,300

Assume that fixed costs of $ 1 comma 000

$1,000 could be eliminated if Product B was dropped. Assume furthermore that dropping one product would not impact sales of the other. If Product B isdropped, what would be the impact on total operating income of thecompany?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

2nd edition

134730372, 134730370, 978-0134730370

More Books

Students also viewed these Accounting questions

Question

What are the benefits of making a to-do list? (p. 299)

Answered: 1 week ago

Question

Mortality rate

Answered: 1 week ago

Question

Armed conflicts.

Answered: 1 week ago