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Product Line A Contribution margin Rings Company has three product lines, A, B, and C. The following financial information is available: Item Sales Variable
Product Line A Contribution margin Rings Company has three product lines, A, B, and C. The following financial information is available: Item Sales Variable costs Fixed costs: $ 13,125 Product Line B Product Line C $ 48,000 $ 90,000 $ 21,000 $ 28,800 $ 48,000 $ 19,200 $ 42,000 $ 7,875 Avoidable $5,200 $ 13,500 $ 5,700 Unavoidable $ 3,900 $ 9,000 $ 2,900 Pre-tax operating income $ 10,100 $19,500 $ (725) Rings is thinking of dropping Product Line C because it is reporting an operating loss. Assuming the company drops Product Line C and does not replace it, pretax operating income for the firm will likely:
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