Use the following information for the next 3 questions.
Ricardo Company has three products, A, B, and C. The following information is available:
-If Ricardo drops Product C, then operating income will
A) Increase by $2,200
B) Decrease by $16,000
C) Decrease by $4,000
D) Decrease by $9,800

Question

Use the following information for the next 3 questions.
Ricardo Company has three products, A, B, and C. The following information is available: 
-If Ricardo drops Product C, then operating income will
A) Increase by $2,200 
B) Decrease by $16,000 
C) Decrease by $4,000 
D) Decrease by $9,800

Quizplus · Accepted Answer

Dropping Product C will result in a decrease in operating income by $4,000, likely due to the loss of contribution margin that Product C provides, which exceeds any fixed costs saved by discontinuing the product.

Use the Following Information for the Next 3 Questions