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Please Help!!! QUESTION 5 The Crayon Company (CC) currently makes yellow, red, blue, and purple crayons. CC sells the crayons to a packaging company, where
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QUESTION 5 The Crayon Company (CC) currently makes yellow, red, blue, and purple crayons. CC sells the crayons to a packaging company, where they are then sold to restaurants and included with kid menus. Regardless, CC is considering dropping purple crayons because the demand doesn't appear to exist and the purple crayon division is reporting a loss. Considering the following information, how much would CC's income change if purple crayons are discontinued (use positive number for increase and negative for decrease, but don't use dollar signs)? Traceable fixed cost for a color is avoidable if that color is no longer produced. The total allocated fixed cost would not change for CC. Color Units sold Sales price Variable cost Traceable fixed cost Allocated fixed cost Red Yellow Blue Purple 100,000 100,000 100,000 10,000 0.03 0.03 0.03 0.03 0.01 0.01 0.01 0.01 500 1000 0 600 1000 1000 1000 1000Step by Step Solution
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