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A company has two different products that sell to separate markets. Financial data are as follows: Revenue Variable costs Fixed costs (allocated) Operating income (loss)
A company has two different products that sell to separate markets. Financial data are as follows: Revenue Variable costs Fixed costs (allocated) Operating income (loss) Product A $16,000 (6,000) (3,000) $7,000 Product B $9,000 (9,200) (1,000) $(1,200) Total $25,000 (15,200) (4,000) $5,800 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. Because the contribution margin of Product B is negative, it should be dropped. O O True False True
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