Question - Langer Company has three products (A, B, and C) that use common facilities. The relevant data concerning these three products follow.
|
|
A
|
B
|
C
|
Total
|
|
Sales
|
$10,000
|
$30,000
|
$40,000
|
$80,000
|
|
Variable costs
|
5,000
|
20,000
|
25,000
|
50,000
|
|
Contribution margin
|
$5,000
|
$10,000
|
$15,000
|
$30,000
|
|
Fixed costs
|
5,000
|
15,000
|
30,000
|
50,000
|
|
Operating loss
|
$0
|
$(5,000)
|
$(15,000)
|
$(20,000)
|
Required - If fixed costs allocated to product line C are not avoidable and if product line C is dropped, what will be the impact on income? Will it increase or decrease?