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A company has two different products that are sold in different markets. Financial data are as follows: Revenue Variable cost Fixed cost (allocated) Operating income
A company has two different products that are sold in different markets. Financial data are as follows: Revenue Variable cost Fixed cost (allocated) Operating income (loss) Product A $15,000 (9,000) (2,000) $4,000 Product B $9,400 (9,800) (2,100) $(2,500) Total $24,400 (18,800) (4,100) $1,500 Assume that fixed costs of $2,000 could be eliminated if Product B was dropped. Assume furthermore that dropping one product would not impact sales of the other. If Product B is dropped, what would be the impact on total operating income of the company? A. increases by $400 B. increases by $2,100 C. increases by $2,000 D. increases by $2,400
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