Question
A company produces three styles of running shoes: style A, B, and C Style A Style B Style C Sales $210,000 $115,000 $60,000 Variable Expenses
A company produces three styles of running shoes: style A, B, and C Style A Style B Style C Sales $210,000 $115,000 $60,000 Variable Expenses $64,000 $40,000 $40,000 Fixed Expenses $108,000 $60,000 $31,000 Net Income $38,000 $15,000 -$11,000 The company is contemplating on whether it should drop Style C or not. Below is additional information about its fixed expenses: The fixed expenses line is made up of common and direct fixed expenses. Style A has $20,000 of direct fixed expenses. Style B has $15,000 of direct fixed expenses. Style C has $12,000 of direct fixed expenses. The remaining common fixed expenses include things like rent and salaries that won't change if the company stops producing a style of shoe. Should the company drop Style C? Write yes or no. Explain WHY with numbers for how much it would gain/lose.
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