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Question - IGREG manufactures and sells 15,000 units per month of product A and 30,000 units per month of product B.
The selling price of Product A is $40 per unit and its variable cost is $28 per unit.
The selling price of Product B is $29 per unit and its variable cost is $17 per unit.
IGREG is considering the disposal of Product A. A study has shown that if Product A were eliminated, $140,000 of its total fixed costs of $200,000 cannot be eliminated. What is the impact of eliminating Product A on the company's profit?
a) $20,000 increase
b) No answer is appropriate
c) decrease by $120,000
d) decrease by $180,000
e) decrease by $60,000
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