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Giant Company has three products, A, B, and C. The following information is available:

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Giant Company has three products, A, B, and C. The following information is available:

Giant Company has three products, A, B, and C. The following information is available:

Product AProduct BProduct C
Sales$70,000$97,000$23,000
Variable costs37,00051,00015,000
Contribution margin33,00046,0008,000
Fixed costs:
Avoidable10,00020,0002,000
Unavoidable7,00012,0009,400
Operating income$16,000$14,000$ (3,400)

Giant Company is thinking of dropping Product C because it is reporting a loss. Assuming Giant drops Product C and does NOT replace it, operating income will ________.
A) increase by $3,400
B) increase by $2,000
C) decrease by $6,000
D) decrease by $11,400

Textbook

Cost Accounting: A Managerial Emphasis

Edition: 16^th

Authors: Horngren, Datar, Rajan

Read 243 times

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werstlingbum Author

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Correct again

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Carman N.

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thank you

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