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Company sells 3 products A, B, and C. The following the sales and the cost data for the three products: A B C Units 5,000
Company sells 3 products A, B, and C. The following the sales and the cost data for the three products:
A B C
Units 5,000 6,000 3,000
Selling Price 15 12 20
Costs:
Variable 12 5 10
Fixed 5 5 5
Total Unit Cost 17 10 15
Profit (loss) per unit (2) (2) (5)
Total fixed cost is allocated among the products based on the units produced and sold. The company does not keep inventories. Production is done based on sales orders received from the customers. Which product should be eliminated and why?
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