Solution-Should the company drop Product C

Should the company drop Product C

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Reference no: EM133074001

Question - Katrina Products' general manager worries about the company's performance. She segmented the company's income statement product by product and obtained the following picture:

	A	B	C
Sales	20,000	30,000	38,000
Less Variable Costs	15,000	22,000	34,000
Total Contribution Margin	5,000	8,000	4,000
Less Fixed Costs Allocated to Each Product	3,000	5,000	7,000
Net Operating Profit (Loss)	2,000	3,000	(3,000)

Should the company drop Product C, given that doing so would eliminate Product C's sales and variable costs and reduce the company's total fixed costs by only $5,000? Dropping Product C would have no effect on the profits from Products A and B.

Reference no: EM133074001

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Should the company drop Product C

Reference no: EM133074001

Reference no: EM133074001

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