The firm I Love Cost Accounting, Co. provides cost accountingtutoring as well as CMA test prep classes. Cost accounting tutoringbrings in $1,200,000 in revenue. CMA test prep classes bring in$4,000,000 in revenue.
Cost accounting tutoring costs the firm $2,100,000, and CMA testprep classes cost the firm $2,750,000.
If the firm drops cost accounting tutoring, then revenue for CMAtest prep classes will decrease by 20%. And if the firm drops costaccounting tutoring, it cannot avoid $70,000 of the cost ofproviding cost accounting tutoring.
| a. | It is $100,000 LESS profitable to keep the cost accountingtutoring product than to drop it. |
| b. | It is $100,000 MORE profitable to keep the cost accountingtutoring product than to drop it. |
| c. | It is $30,000 MORE profitable to keep the cost accountingtutoring product than to drop it. |
| d. | It is $30,000 LESS profitable to keep the cost accountingtutoring product than to drop it. |
