Question
ABC Company has three products that use common facilities. The relevant data concerning these three products follows: Product A B C Total Sales $10,000 $30,000
ABC Company has three products that use common facilities. The relevant data concerning these three products follows:
| Product | A | B | C | Total |
| Sales | $10,000 | $30,000 | $40,000 | $80,000 |
| Variable costs | 5,000 | 20,000 | 25,000 | 50,000 |
| Contribution Margin | 5,000 | 10,000 | 15,000 | 30,000 |
| Fixed cost | 5,000 | 15,000 | 30,000 | 50,000 |
| Operating loss | 0 | -$ 5,000 | -$15,000 | -$20,000 |
Fixed costs are allocated common costs. If product line C is dropped, what will be the impact on operating profits? Be certain to show your work!
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The Speed Of Risk Lessons Learned On The Audit Trail
Authors: Richard F. Chambers, CIA, QIAL, CGAP, CCSA, CRMA
2nd Edition
163454059X, 978-1634540599
