Question
Company MM currently sells three products - A, B and C. The financial information for the products is in the table below. A B C
Company MM currently sells three products - A, B and C. The financial information for the products is in the table below.
A | B | C | |
Sales | $100000 | $80000 | $120000 |
Variable costs | $70000 | $60000 | $80000 |
Fixed costs | $25000 | $25000 | $25000 |
Profit/Loss | $5000 | -$5000 | $15000 |
The manager of Company MM wants to remove Product B which is currently 'making a loss'.
Required:
Advise the manager if Product B should be removed. You must support your argument with evidence from financial and non-financial perspectives. You must state your assumptions as well.
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Financial Accounting Theory
Authors: William R. Scott, Patricia O'Brien
8th Edition
013416668X, 978-0134166681
