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Richardson Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in
Richardson Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in production processes, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss E Click the icon to view the income statement.) Richardson Company Income Statement Month Ended June 30, 2016 Total Product A Product B Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Incomel/(Loss) 124,250 15,750 30,000 (14,250) S 40,000 $ 70,000 $ 70,000 63,500 6,500 3,000 60,750 9,250 27,000 3,500 S (17,750) S 9. If fixed costs cannot be avoided, should Richardson drop Product B? Why or why not? 10. If 50% of Product B's fixed costs are avoidable, should Richardson drop Product B? Why or why not? 9. If fixed costs cannot be avoided, should Richardson drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected increase/(decrease) in operating income Richardson 10. If 50% of Product B's fixed costs are avoidable, should Richardson drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in Vdrop Product B because operating income will profits.) Expected decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increase/(decrease) in operating income McCollumm Vdrop Product B because operating income will
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