Solution-What will be the impact on profit

What will be the impact on profit

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Question - Woodruff Ltd. sells three rocking chairs (Unfinished, Stained and Painted) that use common facilities. The relevant data concerning these three products follow.

	Unfinished	Stained	Painted	Total
Sales	$10,000	$30,000	$40,000	$80,000
Variable costs	5,000	20,000	25,000	50,000
Contribution Margin	$5,000	$10,000	$15,000	$30,000
Fixed costs	5,000	15,000	30,000	50,000
Operating loss	$0	$(5,000)	$(15,000)	$(20,000)

Required: If $15 000 of the fixed costs allocated to the Painted rocking chairs are avoidable and the company drops Painted rockers from its product line, what will be the impact on profit?

Reference no: EM131580043

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What will be the impact on profit

Reference no: EM131580043

Reference no: EM131580043

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