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Mackenzie Ltd. manufactures and sells two items, products A and B. The company is considering dropping product B. It is expected that sales of product

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Mackenzie Ltd. manufactures and sells two items, products A and B. The company is considering dropping product B. It is expected that sales of product A will increase by 30% as a result. If product B is dropped fixed costs of $2,000 will be avoided. An income statement with both products follows. Product A Product B Total Sales $10,000 $8,000 $18,000 Direct materials 2.500 2,000 4,500 Direct labour 2,000 1.200 3,200 Contribution margin $5,500 4,800 10.300 Fixed costs 1,300 4.700 6.000 Operating income $ 4.200 $ 100 $ 4.300 What impact will dropping Product B have on Mackenzie's monthly operating income

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