What recommendation would you make to management

Assignment Help Accounting Basics
Reference no: EM13256673

Paxton Products has three productlines: A, B, and C.


           A

      B   

        C   

       Total  

Sales

$ 90,000

$ 150,000

$ 200,000

$ 440,000

Variable costs

50,000

130,000

100,000

280,000

Contribution margin

40,000

20,000

100,000

160,000

Fixed costs

45,000

  50,000

  50,000

145,000

Net income

(5,000)

$(20,000)

50,000

25,000

Management is considering dropping product lines A and B.If 50% of the fixed costs for dropped products could be avoided, what recommendation would you make to management? Quantify you answer.

Reference no: EM13256673

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