Assuming the company drops product line c

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Reference no: EM133348367

Question: Rings Company has three product lines, A, B, and C. The following financial information is available:

Item	Product Line A	Product Line B	Product Line C
Sales	$ 50,000	$ 95,000	$ 22,000
Variable costs	$ 30,000	$ 51,000	$ 13,750
Contribution margin	$ 20,000	$ 44,000	$ 8,250
Fixed costs:
Avoidable	$ 5,300	$ 14,000	$ 6,000
Unavoidable	$ 4,000	$ 9,500	$ 3,000
Pre-tax operating income	$ 10,700	$ 20,500	$ (750)

Rings is thinking of dropping Product Line C because it is reporting an operating loss. Assuming the company drops Product Line C and does not replace it, pretax operating income for the firm will likely:

Reference no: EM133348367

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