Question

ABC Company sells three products. Income statements for the three products for the most recent year appear below: Product A Product B Product C $120,000 Sales revenue $180,000 $145,000 .... ...... Costs: Variable costs 78,000 87,000 54,000 Advertising 12,000 7,000 8,000 10,000 10,000 Rent 10,000 35,000 30,000 25,000 Supervisor's salary 2,000 6,000 Property taxes .......... 10,000 8,000 68,000 <15,000> Net income/loss .... .... ... The rent is allocated to the three products equally and the property taxes are allocated based on the square footage each product uses in the factory. The president of the company is considering eliminating Product A. If ABC Company eliminates Product A, sales of Product B are expected to increase by $10,000. Calculate the increase in company profits if Product A is dropped. 5,000

I'm not sure with my answer.

Answer 1

Particulars	Product-B	Product-C
Sales Revenue	$   190,000.00	$ 145,000.00
Costs :
Variable Costs	$     57,000.00	$ 87,000.00
Advertising	$       7,000.00	$    8,000.00
Rent	$     15,000.00	$ 15,000.00
Supervisor's Salary	$     35,000.00	$ 30,000.00
Property Taxes	$     13,500.00	$    4,500.00
Net Income /( LOSS)	$     62,500.00	$       500.00

Total Profit after Eliminating Product-A	$     63,000.00
Total Profit before Elimination	$     61,000.00
Increase in Profit after Elimination	$       2,000.00

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