Rambo Company has three products, A, B, and C. The following information is available: Product A Product
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Rambo Company has three products, A, B, and C. The following information is available:
Product A | Product B | Product C | |
Sales | 60,000 $ | 90,000 $ | 24,000 $ |
Variable prices | 36,000 | 48,000 | 15,000 |
Contribution margin | 24,000 | 42,000 | 9,000 |
Fixed costs: | |||
preventable | 6,000 | 15,000 | 4,000 |
inevitable | 7,000 | 9,000 | 5,400 |
Operating income | $11,000 | 18,000 $ | $(400) |
Rambo Company is considering discontinuing Product C because it has reported damage. Assuming Rambo drops Product C, what about operating income? ( HINT : The answer is $5,000 reduction but I have to work to support it)
Related Book For
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra
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