Reference no: EM131561255

Problem -

A company has two different products that are sold in different markets. Financial data are as follows:

Product A

Product B

Total

Revenue

$17,000

$9,300

$26,300

Variable cost

(8,000)

(9,800)

(17,800)

Fixed cost (allocated)

(2,000)

(2,200)

(4,200)

Operating income (loss)

$7,000

$(2,700)

$4,300

Assume that fixed costs of $1,000 could be eliminated if Product B was dropped. Assume furthermore that dropping one product would not impact sales of the other. If Product B is dropped, what would be the impact on total operating income of the company?