Question
Company A provides you with the following information about its only products, X and Y, in the first year of operation. The company produced and
Company A provides you with the following information about its only products, X and Y, in the first year of operation. The company produced and sold 5,000 units of product X and 10,000 units of product Y. X Y Turnover $540,000 $400,000 Cost of goods sold $340,000 $258,000 Gross margin $200,000 $142,000 Operating expenses $ 220,000 $ 795,00 Revenues $ (20,000) 62,500 . Fixed manufacturing costs per unit are $3 for X and $4 for Y. . Fixed manufacturing overhead costs are included in cost of goods sold. . Variable operating costs per unit are $4 for X and $3 for Y. Other operating costs are fixed. Eliminate the desire for X. In this case, X's fixed manufacturing overhead and X's fixed operating costs would not be saved. What would be the impact on the company's net profit? Profit is reduced by $195,000 Profit is reduced by $20,000 No answer is appropriate Profit decreased by $175,000 Profit decreased by $325,000
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