Which of these two flavors should be dropped or not

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Question - Bronze Star Company sells various flavors of beverages and the April 2021 income statement for selected flavors is presented:

Carrot Flavor Corn Flavor

Net Sales Revenue $21,000 $39,000

Cost of Goods Sold

Variable $13,000 $21,000

Fixed $7,000 $10,000

Gross Profit $1,000 $8,000

Selling and Admin Expenses

Variable $5,000 $5,000

Fixed $4,000 $4,000

Operating Income ($8,000) ($1,000)

If Bronze Star drops a flavor, the fixed selling and administrative expenses can be avoided but none of the fixed cost of goods sold can be avoided. Which of these two flavors should be dropped or not?

Reference no: EM132965400

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