A Company Has Two Different Products That Sell to Separate

question 135

True/False

A company has two different products that sell to separate markets.Financial data are as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } &{ \text { Total } } \\\hline \text { Revenue } & \$ 15,000 & \$ 9,000 & \$ 24,000 \\\hline \text { Variable costs } & ( 8,000 ) & ( 9,200 ) & ( 17,200 ) \\\hline \text { Fixed costs (allocated) } & \$ 2,000 ) & \underline { ( 1,000 ) } & \$ 3,000 ) \\\hline \text { Operating income (loss) } & \$ 5,000 & \$ ( 1,200 ) & \$ 3,800 \\\hline\end{array}$$ Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other.Because the contribution margin of Product B is negative,it should be dropped.

---

Definitions:

Extend the Vertebral Column

The action of increasing the angle between the bones of the spine, essentially straightening it from a bent position.

Spinalis Thoracis

A muscle in the back that helps extend the vertebral column and maintain an upright posture.

Longissimus Thoracis

A major muscle in the back part of the spinal erector group that helps in extending and laterally flexing the spine.

Spinalis Cervicis

A muscle in the back part of the neck that helps in extending the cervical vertebrae.