A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | }
\hline & \text { Product A } & \text { Product B } & \text { Total } \
\hline \text { Revenue } & \$ 17,000 & \$ 9300 & \$ 26,300 \\
\hline \text { Variable cost } & ( 8000 ) & ( 9800 ) & ( 17,800 ) \\
\hline \text { Fixed cost (allocated) } & \underline { ( 1000 )} & \underline { ( 2100 ) } & \underline { ( 3100 ) } \\
\hline \text { Operating income (loss) } & \underline { \$ 8000} & \underline { \$ ( 2600 )} & \underline { \$ 5400} \\
\hline
\end{array}$$ Assume that fixed costs of $2000 could be eliminated if Product B was dropped.Assume furthermore that dropping one product would not impact sales of the other.If Product B is dropped,what would be the impact on total operating income of the company?

Question

A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | } 
\hline & \text { Product A } & \text { Product B } & \text { Total } \
\hline \text { Revenue } & \$ 17,000 & \$ 9300 & \$ 26,300 \\
\hline \text { Variable cost } & ( 8000 ) & ( 9800 ) & ( 17,800 ) \\
\hline \text { Fixed cost (allocated) } & \underline { ( 1000 )} & \underline { ( 2100 ) } & \underline { ( 3100 ) } \\
\hline \text { Operating income (loss) } & \underline { \$ 8000} & \underline { \$ ( 2600 )} & \underline { \$ 5400} \\
\hline
\end{array}$$ Assume that fixed costs of $2000 could be eliminated if Product B was dropped.Assume furthermore that dropping one product would not impact sales of the other.If Product B is dropped,what would be the impact on total operating income of the company?

Quizplus · Accepted Answer

The Answer of A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | } 
\hline & \text { Product A } & \text { Product B } & \text { Total } \
\hline \text { Revenue } & \$ 17,000 & \$ 9300 & \$ 26,300 \\
\hline \text { Variable cost } & ( 8000 ) & ( 9800 ) & ( 17,800 ) \\
\hline \text { Fixed cost (allocated) } & \underline { ( 1000 )} & \underline { ( 2100 ) } & \underline { ( 3100 ) } \\
\hline \text { Operating income (loss) } & \underline { \$ 8000} & \underline { \$ ( 2600 )} & \underline { \$ 5400} \\
\hline
\end{array}$$ Assume that fixed costs of $2000 could be eliminated if Product B was dropped.Assume furthermore that dropping one product would not impact sales of the other.If Product B is dropped,what would be the impact on total operating income of the company?

A Company Has Two Different Products That Are Sold in Different