Pepper Industries has three product lines, A, B, and C. The following information is available: A B C Sales R60 000 R90 000 R24 000 Variable costs R36 000 R48 000 R15 000 Contribution margin R24 000 R42 000 R9 000 Fixed costs: Avoidable 9 000 18 000 6 000 Unavoidable 6 000 9 000 5 400 Operating income R9 000 R15 000 R(2 400) Pepper Industries is thinking of dropping product line C because it is reporting a loss. Assuming Pepper drops line C and does not replace it, the operating income will : decrease by R3 000 increase by R2 400 increase by R3 000 decrease by R5 400
Pepper Industries has three product lines, A, B, and C. The following information is available:
A B C
Sales R60 000 R90 000 R24 000
Variable costs R36 000 R48 000 R15 000
Contribution margin R24 000 R42 000 R9 000
Fixed costs:
Avoidable 9 000 18 000 6 000
Unavoidable 6 000 9 000 5 400
Operating income R9 000 R15 000 R(2 400)
Pepper Industries is thinking of dropping product line C because it is reporting a loss.
Assuming Pepper drops line C and does not replace it, the operating income will :
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decrease by R3 000 |
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increase by R2 400 |
||
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increase by R3 000 |
||
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decrease by R5 400 |
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