A company has two different products that are sold in different markets. Financial data are as follows:
Revenue
Variable cost
Fixed cost (allocated)
Operating income (loss)
Product A Product B
Total
$15,000
$9,400
$24,400
(9,000) (9,700) (18,700)
(2,000) (2,200) (4,200)
$4,000 $(2,500)
$1,500
Assume that fixed costs are all unavoidable and 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. increases by $2,200
B. decreases by $300
C. decreases by $2,200
D. increases by $300