A company has assessed the profitability of its three products as shown here: Product A Product B Product C Total Sales (units) 3,000 5,000 2,000 10,000 £ £ £ Price 15.00 10.00 5.00 Variable costs 6.00 4.00 3.00 Divisible fixed costs 2.00 1.00 0.50 Non-divisible fixed costs 2.00 2.00 2.00 Profit/(Loss) 5.00 3.00 (0.50) As a result of this, it has been suggested that Product C should be dropped. All other things being equal what would be the financial impact of dropping Product C? A Profit would increase by £1,000. B Profit would increase by £2,000. C Profit would fall by £3,000. Profit would fall by £4,000. D

A company has assessed the profitability of its three products as shown here: Product A Product B Product C Total Sales (units) 3,000 5,000 2,000 10,000 £ £ £ Price 15.00 10.00 5.00 Variable costs 6.00 4.00 3.00 Divisible fixed costs 2.00 1.00 0.50 Non-divisible fixed costs 2.00 2.00 2.00 Profit/(Loss) 5.00 3.00 (0.50) As a result of this, it has been suggested that Product C should be dropped. All other things being equal what would be the financial impact of dropping Product C? A Profit would increase by £1,000. B Profit would increase by £2,000. C Profit would fall by £3,000. Profit would fall by £4,000. D

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.16E: Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that...

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