ABC Company Has Three Products That Use Common Facilities

Multiple Choice

ABC Company has three products that use common facilities.The relevant data concerning these three products follows:

Fixed costs are allocated common costs.If product line C is dropped,what will be the impact on operating profits?

A) Operating loss will decrease to ($15,000) .
B) Operating loss will decrease to ($5,000) .
C) Operating loss will increase to ($35,000) .
D) There would be no change in operating profits.