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    Financial advantage or disadvantage of dropping the product

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    Acme Brands is considering dropping one of its mediocre performing products. If dropped, Acme can immediately eliminate $20,000 of the fixed costs. $10,000 of the fixed costs can be re-assigned to another product where it will result in an increase of $12,000 in contribution margin for that product. Calculate the financial advantage or disadvantage of dropping the product given its current performance:
    Sales $100,000
    Variable costs 60,000
    Contribution margin 40,000
    Fixed costs 50,000
    Net operating loss $ (10,000).

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    https://brainmass.com/business/business-policy-and-implementation/financial-advantage-disadvantage-dropping-product-230269

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    Financial advantage will be calculated by taking all the costs and ...

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    Response provides the steps of calculating the financial advantage or disadvantage of dropping the product.

    $2.19

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