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F: (Click the icon to view the income statement.) McCollum Company manufactures two products. Both products have the same sales price, and the volume of
F: (Click the icon to view the income statement.) McCollum 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 A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss. 9. If fixed costs cannot be avoided, should McCollum drop Product B? Why or why not? If 50% of Product B's fixed costs are avoidable, should McCollum drop Product B? Why or why not? 10. 9. If fixed costs cannot be avoided, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected increase/(decrease) in operating income McCollum drop Product B because operating income will 10. If 50% of Product B's fixed costs are avoidable, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Data Table Expected decrease in fixed costs Expected decrease in total costs Expected increase/decrease) in operating income McCollum Company Income Statement Month Ended June 30, 2018 McCollum drop Product because operating income will Total Product A Product B Net Sales Revenue $ 150,000 $ 90,000 75,000 $ 55,000 75,000 35,000 Variable Costs Enter any number in the edit fields and then continue to the next question. Contribution Margin 60,000 50,000 20,000 5,000 40,000 45,000 Fixed Costs $ 10,000 $ Operating Income/(Loss) 15,000 $ (5,000)
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