Question
A company produces and sells three products, C, J & P. The most recent results of the product lines are shown below, for the last
A company produces and sells three products, C, J & P. The most recent results of the product lines are shown below, for the last year.
C | J | P | |
Sales | $200,287 | $151,634 | $125,222 |
Variable costs | $95,441 | $74,034 | $50,811 |
Fixed Costs | $63,267 | $72,712 | $65,893 |
Assume that if a product is dropped, the fixed costs of that product line will be reduced by 70%.
Management is contemplating dropping product J. Compute operating income for all three products. Then compute operating income after dropping product J.
READ THIS CAREFULLY:
Enter the difference between the old and new operating income. If operating income goes down after dropping J, enter a negative sign in front of your number. So for example if income drops by 3334, enter -3334 as your answer.
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