McCollum Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in productionprocesses, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss. McCollum Company Income Statement Month Ended June 30, 2018 Total Product A Product B Net Sales Revenue 150,000 S 75,000 S 75,000 Variable Costs 90,000 55,000 35,000 Contribution Margin 60,000 20,000 40,000 Fixed Costs 50.000 5,000 45,000 Operating Income/(Loss) 10,000 S 15,000 S (5,000) FILL IN THE BLANKS 9. If fixed costs cannot be avoided, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected increase/(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because income will ( decrease by $40000 / decrease by $5000 / Increase by $40000 / Increase by $5000) 10. If 50% of Product B's fixed costs are avoidable, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increasel(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because operating income will (decrease by $17500 / decrease by $5000 / Increase by $17500 / Increase by $5000) McCollum Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in productionprocesses, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss. McCollum Company Income Statement Month Ended June 30, 2018 Total Product A Product B Net Sales Revenue 150,000 S 75,000 S 75,000 Variable Costs 90,000 55,000 35,000 Contribution Margin 60,000 20,000 40,000 Fixed Costs 50.000 5,000 45,000 Operating Income/(Loss) 10,000 S 15,000 S (5,000) FILL IN THE BLANKS 9. If fixed costs cannot be avoided, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected increase/(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because income will ( decrease by $40000 / decrease by $5000 / Increase by $40000 / Increase by $5000) 10. If 50% of Product B's fixed costs are avoidable, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increasel(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because operating income will (decrease by $17500 / decrease by $5000 / Increase by $17500 / Increase by $5000) McCollum Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in productionprocesses, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss. McCollum Company Income Statement Month Ended June 30, 2018 Total Product A Product B Net Sales Revenue 150,000 S 75,000 S 75,000 Variable Costs 90,000 55,000 35,000 Contribution Margin 60,000 20,000 40,000 Fixed Costs 50.000 5,000 45,000 Operating Income/(Loss) 10,000 S 15,000 S (5,000) FILL IN THE BLANKS 9. If fixed costs cannot be avoided, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected increase/(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because income will ( decrease by $40000 / decrease by $5000 / Increase by $40000 / Increase by $5000) 10. If 50% of Product B's fixed costs are avoidable, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increasel(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because operating income will (decrease by $17500 / decrease by $5000 / Increase by $17500 / Increase by $5000) McCollum Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in productionprocesses, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss. McCollum Company Income Statement Month Ended June 30, 2018 Total Product A Product B Net Sales Revenue 150,000 S 75,000 S 75,000 Variable Costs 90,000 55,000 35,000 Contribution Margin 60,000 20,000 40,000 Fixed Costs 50.000 5,000 45,000 Operating Income/(Loss) 10,000 S 15,000 S (5,000) FILL IN THE BLANKS 9. If fixed costs cannot be avoided, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected increase/(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because income will ( decrease by $40000 / decrease by $5000 / Increase by $40000 / Increase by $5000) 10. If 50% of Product B's fixed costs are avoidable, should McCollum drop Product B? Why or why not? (Use a minus sign or parentheses to enter a decrease in profits.) Expected decrease in revenue Expected decrease in total variable costs Expected decrease in fixed costs Expected decrease in total costs Expected increasel(decrease) in operating income McCollum V drop Product B because operating income will McCollum (should/ should not) drop product B because operating income will (decrease by $17500 / decrease by $5000 / Increase by $17500 / Increase by $5000)