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A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $15,000 $9,500
A company has two different products that are sold in different markets. Financial data are as follows:
| Product A | Product B | Total |
Revenue | $15,000 | $9,500 | $24,500 |
Variable cost | (9,000) | (9,800) | (18,800) |
Fixed cost (allocated) | (3,000) | (2,000) | (5,000) |
Operating income | $3,000 | ($2,300) | $700 |
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?
increase $2,000 | ||
increase $300 | ||
decrease $2,000 | ||
decrease $300 |
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