A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | }
\hline & \text { Product A } & \text { Product B } & \text { Total } \
\hline \text { Revenue } & \$ 15,000 & \$ 9,500 & \$ 24,500 \
\hline \text { Variable cost } & ( 8,000 ) & ( 9,700 ) & ( 17,700 ) \
\hline \text { Fixed cost (allocated) } & \underline { ( 2,000 ) } & \underline { ( 2,000 ) } & \underline { ( 4,000 ) } \
\hline \text { Operating income (loss) } & \$ 5,000 & \$ ( 2,200 ) & \$ 2,800 \
\hline
\end{array}$$ Assume that fixed costs of $4,000 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: $$\begin{array} { | l | r | r | r | } 
\hline & \text { Product A } & \text { Product B } & \text { Total } \
\hline \text { Revenue } & \$ 15,000 & \$ 9,500 & \$ 24,500 \
\hline \text { Variable cost } & ( 8,000 ) & ( 9,700 ) & ( 17,700 ) \
\hline \text { Fixed cost (allocated) } & \underline { ( 2,000 ) } & \underline { ( 2,000 ) } & \underline { ( 4,000 ) } \
\hline \text { Operating income (loss) } & \$ 5,000 & \$ ( 2,200 ) & \$ 2,800 \
\hline
\end{array}$$ Assume that fixed costs of $4,000 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: $$\begin{array} { | l | r | r | r | } 
\hline & \text { Product A } & \text { Product B } & \text { Total } \
\hline \text { Revenue } & \$ 15,000 & \$ 9,500 & \$ 24,500 \
\hline \text { Variable cost } & ( 8,000 ) & ( 9,700 ) & ( 17,700 ) \
\hline \text { Fixed cost (allocated) } & \underline { ( 2,000 ) } & \underline { ( 2,000 ) } & \underline { ( 4,000 ) } \
\hline \text { Operating income (loss) } & \$ 5,000 & \$ ( 2,200 ) & \$ 2,800 \
\hline
\end{array}$$ Assume that fixed costs of $4,000 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