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Clean Floor Company has three product lines, A, B, and C. The following information is available: A B C Sales $60,000 $38,000 $26,000 Variable costs
Clean Floor Company has three product lines, A, B, and C. The following information is available:
A | B | C | |
Sales | $60,000 | $38,000 | $26,000 |
Variable costs | 36,000 | 18,000 | 12,000 |
Contribution margin | 24,000 | 20,000 | 14,000 |
Fixed expenses | 12,000 | 15,000 | 16,000 |
Operating income (loss) | $12,000 | $5,000 | $2,000 |
Clean Floor Company is thinking of dropping producting line C because it is reporting an operating loss. Assuming Clean Floor Company drops line C and does not replace it, the operating income will:
a. increase $2,000
b. decreased $14,000
c. increase $14,000
d. increase $16,000
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