Question
Corp has three products, A, B, and C. The following information is available: (In the chart below, *Avoidable means the costs will not be incurred
Corp has three products, A, B, and C. The following information is available: (In the chart below, *Avoidable" means the costs will not be incurred next period if the product is dropped. "Unavoidable" means the costs will be incurred next period even if the product is dropped.)
PRODUCT A PRODUCT B. PRODUCT C
SALES $60,000 $90,000 $24,000
VARIABLES 36,000 48,000 15,000
Contribution margin 24,000 42,000 9,000
Fixed costs:
Avoidable 6,000 15,000 4,400
Unavoidable 7,000 11,000 5,000
Operating income 11,000 16,000 $(400)
Assuming Corp discontinues Product C at the end of this period, how much (in $) will Corp's overall operating income (for the entire company) be next period? A) 21,600 B) 26,600 C) 27.000 D) 22,000 E) 18,000
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