Central Industries has three product lines: A, B and C. The following information is available:
Product A     Product B  Product C
Sales $100,000 $90,000 $44,000
Variable costs 76,000 48,000 35,000
Contribution margin  24,000  42,000   9,000
Avoidable fixed costs   9,000 18,000  3,000
Unavoidable fixed costs  6,000  9,000 7,700
Operating income(loss)  $9,000  $15,000 $(1,700)
Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C and does not replace it. What will happen to operating income? A. increase by $600 B. increase by $2,400 C. decrease by $9,000 D. decrease by $6,000

Answer rating: 100% (QA)

Decrease in Loss reported for C... View the full answer