Home / Questions / Paxton Products has three productlines A B and C
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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