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Rambo Company has three products, A, B, and C. The following information is available: Product A Product B Product C Sales $60,000 $90,000 $24,000 Variable
Rambo Company has three products, A, B, and C. The following information is available:
| Product A | Product B | Product C | |
| Sales | $60,000 | $90,000 | $24,000 |
| Variable Costs | 36,000 | 48,000 | 15,000 |
| Contribution Margin | 24,000 | 42,000 | 9,000 |
| Fixed Costs: | |||
| Avoidable | 6,000 | 15,000 | 4,000 |
| Unavoidable | 7,000 | 9,000 | 5,400 |
| Operating Income | $11,000 | $18,000 | $(400) |
Rambo Company is thinking of dropping Product C because it is reporting a loss. Assuming Rambo drops Product C, what will happen to operating income? (HINT: The answer is decrease by $5,000, but I need work to support this)
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