Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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 Started