Question
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 $
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 prices | 36,000 | 48,000 | 15,000 |
| Contribution margin | 24,000 | 42,000 | 9,000 |
| Fixed costs: | |||
| preventable | 6,000 | 15,000 | 4,000 |
| inevitable | 7,000 | 9,000 | 5,400 |
| Operating income | $11,000 | 18,000 $ | $(400) |
Rambo Company is considering discontinuing Product C because it has reported damage. Assuming Rambo drops Product C, what about operating income? ( HINT : The answer is $5,000 reduction but I have to work to support it)
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Product A Product B Product C Total Sales 60000 90000 24000 174000 Variable ...
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Operations management processes and supply chain
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra
9th edition
9788131728840, 136065767, 8131728846, 978-0136065760
