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A company has two different products that sell to separate markets. Financial data are as follows:

   Product A   Product B   Total
Revenue   $15,000   $9,000   $24,000
Variable costs   (8,000)   (9,200)   (17,200)
Fixed costs (allocated)   (2,000)   (1,000)   (3,000)
Operating income (loss)   $5,000   $(1,200)   $3,800

Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. Because the contribution margin of Product B is negative, it should be dropped.
A) True
B) False
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
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