A Company Has Two Different Products That Are Sold in Different

Multiple Choice

A company has two different products that are sold in different markets. Financial data are as follows: Assume that fixed costs of $1,000 could be eliminated if product B was dropped. Assume furthermore that dropping one product would not impact sales of the other. If Product B is dropped, what would be the impact on total operating income of the company?

A) increase $1,000
B) increase $1,300
C) increase $300
D) increase $2,000