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Q4. A company has assessed the profitability of its three products as shown here: Product A Product B Sales (units) 3,000 5,000 Product C
Q4. A company has assessed the profitability of its three products as shown here: Product A Product B Sales (units) 3,000 5,000 Product C 2,000 Total 10,000 Price 15.00 10.00 5.00 Variable costs 6.00 4.00 3.00 Divisible fixed costs 2.00 1.00 0.50 Non-divisible fixed costs 2.00 2.00 2.00 Profit/(Loss) 5.00 3.00 (0.50) As a result of this, it has been suggested that Product C should be dropped. All other things being equal what would be the financial impact of dropping Product C? ABCD Profit would increase by 1,000. Profit would increase by 2,000. Profit would fall by 3,000. Profit would fall by 4,000. (5 Marks)
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