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Managerial Accounting

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Foggart Corp: Impact on Profits from Dropping Blue Product Line

MGRACT-QUYJP3

Foggart Corp has the following product line results for the most recent period:

Foggart Corp Green Blue Red 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)

Foggart Corp is trying to eliminate the loss.

What will be the change to Foggart Corp's total profits if the Blue product line is eliminated, assuming that 10% of Blue's fixed costs are avoidable?