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Managerial Accounting

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Blu Co. Drop a Product Line: Impact on Profits Dropping Two

MGRACT-QS@U7S

Blu Co. has the following product line results for the most recent period:

Blu Co. Tall Medium Small Total
Sales \$150,000 \$170,000 \$180,000 \$500,000
Variable costs \$75,000 \$119,000 \$111,600 \$305,600
Fixed costs \$60,000 \$70,000 \$80,000 \$210,000
Operating Profit \$15,000 (\$19,000) (\$11,600) (\$15,600)

Blu Co. is trying to eliminate the loss.

What will be the change to Blu Co.'s total profits if the Medium and Small product lines are eliminated, assuming that none of the fixed costs are avoidable?