What recommendation would you make to management

Reference no: EM13256673

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.

Reference no: EM13256673

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