Unos sells three products. Income statements for the three products for the most

Question

 Unos  sells three products. Income statements for the three products for the most recent year appear below:                                    Product A     Product B     Product C Sales revenue  ...............     $120,000      $180,000     $145,000 Costs:      Variable costs ..........       78,000        54,000       87,000      Advertising .............       19,000         7,000        8,000      Rent ....................        3,000         3,000        3,000      Supervisor's salary .....       25,000        35,000       30,000      Property taxes ..........       10,000         6,000        2,000 Net income/loss ..............      <15,000>       75,000       15,000  The rent is allocated to the three products equally and the property taxes are allocated based on the square footage each product uses in the factory.  The president of the company is considering eliminating Product A.  Calculate the amount by which the company's net income will increase if Product A is dropped.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars ProductB ProductC Total Sales revenues:        180,000.00        145,000.00        325,000.00 Costs: Variable costs           54,000.00           87,000.00        141,000.00 Advertising             7,000.00             8,000.00           15,000.00 Rent             4,500.00             4,500.00             9,000.00 Supervisor's salary           35,000.00           30,000.00           65,000.00 Property Taxes           13,500.00             4,500.00           18,000.00 Net Income/Loss           66,000.00           11,000.00           77,000.00 Company's income will increase by $2,000 (77,000 - 75,000) if product A is dropped

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