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Brevard Industries Produces Two Products The Company's Fixed Costs Totaled $70,000,of Which $15,000 Can Be

Question 46

Multiple Choice

Brevard Industries produces two products.Information about the products is as follows:
 Procuct 1  Procuct 2  Units produced and sold $4,00010,000 Selling price per unit $15$13 Variable costs per unit 98\begin{array} { | l | r | r | } \hline & \text { Procuct 1 } & \text { Procuct 2 } \\\hline \text { Units produced and sold } & \$ 4,000 & 10,000 \\\hline \text { Selling price per unit } & \$ 15 & \$ 13 \\\hline \text { Variable costs per unit } & 9 & 8 \\\hline\end{array}
The company's fixed costs totaled $70,000,of which $15,000 can be directly traced to Product 1 and $40,000 can be directly traced to Product 2.The effect on the firm's profits if Product 2 is dropped would be a:


A) $10,000 increase.
B) $35,000 increase.
C) $35,000 decrease.
D) $10,000 decrease.

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