Question: High West Roller Company has three product lines: D, E, and F. The following information is available: D E F Sales $70,000 $40,000 $30,000 Variable
- High West Roller Company has three product lines: D, E, and F. The following information is available:
|
| D | E | F |
| Sales | $70,000 | $40,000 | $30,000 |
| Variable costs | (40,000) | (20,000) | (25,000) |
| Contribution margin | 30,000 | 20,000 | 5,000 |
| Fixed expenses | (15,000) | (15,000) | (25,000) |
| Operating income (loss) | $15,000 | $5,000 | ($20,000) |
- The company is thinking of dropping product line F because it is reporting an operating loss. Assume that $15,000 of total fixed costs could be eliminated by dropping F. Should product line F be dropped? You must demonstrate that High West is better off with your decision.
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