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How much better off or worse off will the firm be

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Problem 1: A firm is considering dropping the product line "ZZ". ZZ currently shows a loss of $100,000. The contribution margin for the product line is $120,000. Total fixed expenses are $220,000 of which 90,000 is unavoidable and $130,000 is avoidable. How much better off or worse off will the firm be if they keep product ZZ?

Option 1: Better off by keeping ZZ by $30,000
Option 2: Better off by keeping ZZ by $120,000
Option 3: Worse off by keeping ZZ by $10,000
Option 4: Better off by keeping ZZ by $10,000

Reference no: EM132832379

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