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Johnson Company has three product lines: A, B and C. The following information is available: Product A Product B Product C Sales $100,000 $90,000 $45,000
Johnson Company has three product lines: A, B and C. The following information is available:
Product A Product B Product C
Sales $100,000 $90,000 $45,000
Variable costs 76,000 48,000 33,000
Contribution margin 24,000 42,000 12,000
Avoidable fixed costs 9,000 18,000 4,000
Unavoidable fixed costs 6,000 9,000 8,700
Operating income(loss) $9,000 $15,000 $(700)
Johnson Company is thinking about dropping Product C because it is reporting a loss. Assume Johnson Company drops Product C and does not replace it. What will happen to operating income?
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