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A study has been conducted to determine if Product A should be dropped. Sales of...

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Accounting

A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed cost charged to the product total $90,000 per year. The company estimates that $65,000 of these fixed costs can be avoided if the product is dropped .These data indicate that if Product A is dropped, the contribution margin lost will equal:

Select one:

a. $110,000

b. $60,000

c. $65,000

d. $135,000

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