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ABC Company Produces and sells three Products - A, B, C. Product A Product B Product C Total Sales $100,000 $200,000 $300,000 $600,000 Less Cost of goods sold 80,000 150.000 200,000 430.000 Gross margin 20,000 50,000 100,000 170,000 Less Operating expenses Net operating income 30,000 70.000 70,000 170,000 $(10.000) $(20.000) $30,000 $0

ABC Company Produces and sells three Products - A, B, C. Product A Product B Product C Total Sales $100,000 $200,000 $300,000 $600,000 Less Cost of goods sold 80,000 150.000 200,000 430.000 Gross margin 20,000 50,000 100,000 170,000 Less Operating expenses Net operating income 30,000 70.000 70,000 170,000 $(10.000) $(20.000) $30,000 $0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Company Produces and sells three Products - A, B, C. Product A Product B Product C Total Sales $100,000 $200,000 $300,000 $600,000 Less Cost of goods sold 80,000 150,000 200,000 430,000 Gross margin 20,000 50,000 100,000 170,000 Less Operating expenses 30.000 70.000 70,000 170.000 Net operating income $(10.000) $(20.000) $30.000 $0 For each segment, 40% of its cost of goods sold and operating expenses are variable expenses ana the remaining balances are fixed expenses. Total fixed expenses (operating and manufacturing) were allocated to each segment as follows: Fixed Expenses Allocated to Each Segment tao Product A $0 Product B $50,000 Product C $70,000 How much is the total cost that the company can save, if Product A was dropped? Select one: O a. $110,000 O b. $100,000 OC. $90,000
Transcribed Image Text:ABC Company Produces and sells three Products - A, B, C. Product A Product B Product C Total Sales $100,000 $200,000 $300,000 $600,000 Less Cost of goods sold 80,000 150,000 200,000 430,000 Gross margin 20,000 50,000 100,000 170,000 Less Operating expenses 30.000 70.000 70,000 170.000 Net operating income $(10.000) $(20.000) $30.000 $0 For each segment, 40% of its cost of goods sold and operating expenses are variable expenses ana the remaining balances are fixed expenses. Total fixed expenses (operating and manufacturing) were allocated to each segment as follows: Fixed Expenses Allocated to Each Segment tao Product A $0 Product B $50,000 Product C $70,000 How much is the total cost that the company can save, if Product A was dropped? Select one: O a. $110,000 O b. $100,000 OC. $90,000
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