Firm F produces five products: A, B, C, D, and E. Relevant data for all five products are as follows (figures in millions of dollars).

There are no cross-selling effects (i.e., sales of one product do not affect sales of the other products). If a product is removed, the firm saves fixed costs of type I but not fixed costs of type II. There are no capacity constraints.

a. If products with negative operating margins are removed, what is the total operating margin?

b. Which products, if any, should be removed to maximize profit? Explain why.

c. If the products you suggest were removed, what would the total operating margin be?

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Sales Variable cost Contribution margin Fixed cost type I Fixed cost type II Operating margin A B C D E 30 12 18 32836a 40 20 8 21 32 -1 3 2 8 4 21 -7 -3 082323 20 14 6 4 4