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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 $16,000 $9,300
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 | $9,300 | $25,300 |
Variable cost | (8,000) | (9,800) | (17,800) |
Fixed cost (allocated) | (2,000) | (2,100) | (4,100) |
Operating income (loss) | $6,000 | $(2,600) | $3,400 |
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?
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