James & Co. has two different products that are sold in different markets. Financial data are as follows:

Assume that fixed costs of $1,000 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?

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Revenue Variable cost Fixed cost (allocated) Operating income Product A $ 15,000 (9,000) (3,000) $3,000 Product B Total $9,500 (9,800) (2,000) ($2,300) $24,500 (18,800) (5,000) $700 Revenue Variable cost Fixed cost (allocated) Operating income Product A $ 15,000 (9,000) (3,000) $3,000 Product B Total $9,500 (9,800) (2,000) ($2,300) $24,500 (18,800) (5,000) $700

Answer rating: 100% (QA)

Variable Cost 9800 ... View the full answer