Question
Fruit Pie Inc. has three product lines-Strawberry, Cherry, and Apple. The following information is available: Strawberry Cherry Apple $80,000 $40,000 $31,000 (20,000) (5000) (11,000)
Fruit Pie Inc. has three product lines-Strawberry, Cherry, and Apple. The following information is available: Strawberry Cherry Apple $80,000 $40,000 $31,000 (20,000) (5000) (11,000) Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) $60,000 $35,000 $20,000 (15,000) (5000) (23,000) $45,000 $30,000 $(3000) The company is deciding whether to drop product line Apple because it has an operating loss. Assuming fixed costs are unavoidable, if Fruit Pie Inc. drops product line Apple and rents the space formerly used to produce product Apple for $19,000 per year, total operating income will be $71,000 $23,000 $20,000 $11,000
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