The unavoidable costs are allocated based on unit sales of 1,000 A and 2,000 B. What is Wendy's income if product A is dropped?
45. Wendy Company expects the following results, without considering any of the changes described below.
Product A Product B Total
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Sales $100 $300 $400
Variable costs 40 100 140
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Contribution margin $ 60 $200 $260
Fixed costs - avoidable (20) (30) (50)
- unavoidable (50) (100) (150)
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The unavoidable costs are allocated based on unit sales of 1,000 A and 2,000 B.
What is Wendy's income if product A is dropped?
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