Question
A bakery has the following three lines of products. The owner is considering dropping bagel, which...
A bakery has the following three lines of products. The owner is considering dropping bagel, which would reduce the bakery's total fixed costs by $400. All revenue and variable costs would also be eliminated. Sales Variable costs Contribution margin Fixed costs Operating profit (loss) Muffins $ 2,000 $ 500 $ 1,500 $ 1,200 $ 300 Cookies $ 2,600 $ 700 $ 1,900 $ 1,300 $ 600 Bagels Total $ 2,800 $ 7,400 $ 1,500 $ 2,700 $ 1,300 $ 4,700 $ 1,400 $ 3,900 $ (100) $ 800 What would be the total profit if the company dropped the bagel production?
Answers
Muffins Cookies Bagels Total Sales $2,000 $2,600 $4,600 Less: Variable Costs $500 $700 $1,200 Contribution Margin $1,500 $1,900 $0 $3,400 Less: Fixed Costs $1,200 $1,300 $1,000 $3,500 Operating Profit / (loss) $300 $600 -$1,000 -$100 If the company dropped the bagel production the company will start to make losses.
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