Production and sale of doombugs would be

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Reference no: EM132227718

Question:

The Draper Company is considering dropping its Doombug toy due to continuing losses. Revenue and costs data on the toy for the past year follow:

Sales of 15,000 units $150,000
less Variable expenses $120,000
= Contribution margin $30,000
less Fixed expenses $40,000
= Net operating loss ($10,000)

If the toy were discontinued, then Draper could avoid $8,000 per year in fixed costs.

Under the given conditions, the change in annual operating income from discontinuing the production and sale of Doombugs would be.

Reference no: EM132227718

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