This Question: 3 pts 20 of 28 (0 complete) This Test: 100 pts possi A company ha

Question

This Question: 3 pts 20 of 28 (0 complete) This Test: 100 pts possi A company has two different products that are sold in different markets. Financial data are as follows Product A Product BTota $17,000 $9,300 $26,300 Revenue Variable cost Fixed cost (allocated) Operatng income (joss) 9000) 9,900) (18,900) 2000) (2100) (4100) $6,000 $/2,700)$3,300 $ Assume that fsed costs of $2.000 could be elminated i Product 8 was dropped. Assume furthermore that dropping one product w would not impact sales of the other It Product B is dropped, what would be the impact on total operating inoome of the company? O A. increases by 9600 B increases by $2.100 O C. increases by $2.600 D. increases by $2.000

Explanation / Answer

Operating income if production Continue = (2700)

Operating income if production discontinue = (100)

Total profit of company if product continue = 3300

Total profit of company if product discontinue = (6000-100) = 5900

Effect of discontinue = (5900-3300) = 2600

so answer is c) increase by $2600

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