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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 $9,400

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

$9,400

$24,400

Variable cost

(8,000)

(9,900)

(17,900)

Fixed cost (allocated)

(3,000)

(2,000)

(5,000)

Operating income (loss)

$4,000

$(2,500)

$1,500

Assume that fixed costs of

$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 is dropped, what would be the impact on total operating income of the company?

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