### What recommendation would you make to management

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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.

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