Solved

A Company Has Two Different Products That Sell to Separate

Question 90

Multiple Choice

A company has two different products that sell to separate markets. Financial data are as follows:
 Product A  Product B  Total  Reverue $12,000$8,000$20,000 Variable cost ($7,500) ($8,100) ($15,600)  Fixed cost (allocated)  ($3,000) ($1,000) ($4,000)  Operating income $1,500($1,100) $400\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } &{ \text { Total } } \\\hline \text { Reverue } & \$ 12,000 & \$ 8,000 & \$ 20,000 \\\hline \text { Variable cost } & ( \$ 7,500 ) & ( \$ 8,100 ) & ( \$ 15,600 ) \\\hline \text { Fixed cost (allocated) } & ( \$ 3,000 ) & ( \$ 1,000 ) & ( \$ 4,000 ) \\\hline \text { Operating income } & \$ 1,500 & ( \$ 1,100 ) & \$ 400 \\\hline\end{array}
-
Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product B is dropped, what would the impact be on total operating income?


A) Increase $1,100
B) Increase $100
C) Decrease $1,100
D) Decrease $100

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents