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Roberts Company sells two products, A and B. Profitability is as follows: A B Total Sales $50,000 $40,000 $90,000 Less: Variable Costs 30,000 20,000 50,000
Roberts Company sells two products, A and B. Profitability is as follows: A B Total Sales $50,000 $40,000 $90,000 Less: Variable Costs 30,000 20,000 50,000 Equals: Contribution Margin 20,000 20,000 40,000 Less: Fixed Costs 10,000 30,000 40,000 Equals: Net Income $10,000 -$10,000 $0 Fixed costs consist of straight line depreciation on Equipment purchased five years ago. Question: Should product B be discontinued? Yes or No? Why or why not
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