(Click the icon to view the income statement.) Thompson Company manufactures two products Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in production processes Product Ahas higher vanable costs and Product B has higher foved costs Management is considering dropping Product B because that product line has an operating loss 9 If fixed costs cannot be avoided, should Thompson drop Product B? Why or why not? 10. 50% of Product B's fixed costs are avoidable, should Thompson drop Product B? Why or why not? 30 9. It fixed costs cannot be avoided should Thompson drop Product 87 Why or why not? (Use a minus signor parentheses to enter a decrease in pronts Expected decrease in revenue Expected decrease in total variable costs Expected increase (decrease in operating Income Thompson drop Product because operatrancome wil 10.50% of Produd B's fixed costs we wodabile, should Thompson dio Product B? Why or why not? Use a minusson or parentheses to enter a decrease in pronts) Expectad decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increase decrease) in operating income McCollum drop Product B because operating income wil ISPG Thompson Company Income Statement Month Ended June 30, 2018 Total Product A Product B $ Net Sales Revenue 160,000 $ 132,000 80,000 $ 66,800 80,000 65,200 Variable Costs Contribution Margin 28,000 35,000 13,200 3,500 14,800 31,500 Fixed Costs (7,000) $ 9,700 $ (16,700) Operating Income!(Loss) Expected decrease in revenue Expected decrease in total variable costs Expected increasel(decrease) in operating income Thompson drop Product B because operating income will 10. If 50% its are avoidable, should Thompson drop Prodi Expected Expected should able costs Expected should not ts Expected decrease in total costs Expected increase/(decrease) in operating income McCollum drop Product B because operating income will ed costs cannot be avoided, should Thompson drop Product B? Why of Wny ted decrease in revenue cted decrease in total variable costs cted increasel(decrease) in operating income pson drop Product B because operating income will 50% of Product B's fixed costs are avoidable, should Thompson d Use ected decrease in revenue ected decrease in total variable costs decrease by $14,800. ected decrease in fixed costs decrease by $16,700. ected decrease in total costs nected increasel(decrease) in operating income increase by $14,800 Collum drop Product B because operating income will increase by $16,700. Thompson drop Product B because operating income will 10. If 50% of Product B's fixed costs are avoidable, should Thompson drop Product B? Why or Expected decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increasel(decrease) in operating income McCollum Thy drop Product B because operating income will should not should increase/(decrease) in operating income drop Product B because operating income will of Product B's fixed costs are avoidable, should Thompson d Use a decrease in revenue increase by $950. decrease in total variable costs increase by $16,700 decrease in fixed costs decrease in total costs decrease by $950. increasel(decrease) in operating income decrease by $16,700. drop Product B because operating income will
