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The following information pertains to Chrysnta Company's three products:
A B C
Unit sales per year 300 450 300
Selling price per unit $10.00 $15.00 $ 10.
Variable costs per unit 3.50 10.00 12.00
Unit contribution margin $6.50 $ 5.00 $(2.00)
Contribution margin ratio 65% 33.33% (20)%
Assume that product C is discontinued and an extra space is rented for $800 per month. All other information remains the same as the original data.
Annual profits will:
a.increase by $9,600.
b.increase by $9,000.
c.decrease by $600.
d.decrease by $2,000.
Answer & Explanation
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