Question
A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $16,000 $9,400
A company has two different products that are sold in different markets. Financial data are as follows:
| Product A | Product B | Total |
Revenue | $16,000 | $9,400 | $25,400 |
Variable cost | (9,000) | (9,900) | (18,900) |
Fixed cost (allocated) | (3,000) | (2,100) | (5,100) |
Operating | $3,000 | ($2,600) | $1,400 |
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 $2,100
b. Increases by $500
c. Decreases by $2,100
d. Decreases by $500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
B Increases by 500 1 Financila Data if Product B is dropped Product A R...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 StartedRecommended Textbook for
Project Management A Systems Approach to Planning Scheduling and Controlling
Authors: Harold Kerzner
10th Edition
978-047027870, 978-0-470-5038, 470278706, 978-0470278703
Students also viewed these Accounting questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App