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KonstantinChe [14]
4 years ago
7

A company has two different products that are sold in different markets. Financial data are as​ follows: Product A Product B Tot

al Revenue $ 15 comma 000 $ 9 comma 400 $ 24 comma 400 Variable cost ​(7 comma 000​) ​(9 comma 800​) ​(16 comma 800​) Fixed cost​ (allocated) ​(1 comma 000​) ​(2 comma 100​) ​(3 comma 100​) Operating income​ (loss) $ 7 comma 000 ​$(2 comma 500​) $ 4 comma 500 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product B is​ dropped, what would be the impact on total operating income of the​ company?
Business
1 answer:
svet-max [94.6K]4 years ago
3 0

Answer:

Effect on income= $400 increase

Explanation:

Giving the following information:

Product A Product B Total

Revenue $ 9,400

Variable cost ​(9,800​)

Fixed cost​ (allocated) ​(2,100​)

Operating income​ (loss) $(2,500​)

Effect on income= operating income - fixed costs

Effect on income= -2,500 + 2,500= 400 increase

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Based on the fact that Snowpeak Ski Resort offers prices for lifts that are barely over their marginal cost but still make profits from high equipment rental, the pricing strategy in use is Cross-subsidization.

<h3>What is Cross-subsidization?</h3>

This is a pricing strategy that allows a company to charge one group of customers a higher amount for goods sold or services rendered while charging another group of customers a lower amount for other goods and services.

The logic is that the profits from the higher priced goods will take care of the marginal profits from the smaller cost goods and services.

Companies do this because they know that there are services that they can offer that will be easier to sell to people at a higher cost than a lower one. This is what Snowpeak Ski Resort is doing by using the rental fee of equipment to make profits.

Find out more on Cross-subsidization at brainly.com/question/6886629

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8 0
2 years ago
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irinina [24]

Answer:

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3 years ago
________ is a highly complex and highly developed form of reasoning that is based on years of experience and learning.
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Answer:

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Explanation:

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3 years ago
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