James & Co
Subject:AccountingPrice: Bought3
James & Co. has two different products that are sold in different markets. Financial data are as follows:
|
|
Product A |
Product B |
Total |
|
Revenue |
$ 15,000 |
$9,500 |
$24,500 |
|
Variable cost |
(9,000) |
(9,800) |
(18,800) |
|
Fixed cost (allocated) |
(3,000) |
(2,000) |
(5,000) |
|
Operating income |
$3,000 |
$2,300 |
$700 |
Assume that fixed costs of $1,000 could be eliminated if product B was dropped. Assume furthermore that dropping one product would not impact sales of the other.
If Product B is dropped, what would be the impact on total operating income of the company?
