Randazzo's cost accountant recently completed a study that associated cost and revenue data with each

Randazzo's cost accountant recently completed a study that associated cost and revenue data with each product listed in the company's catalogue. Exhibit A identifies sales volume, selling prices per unit, and variable costs for a sample of ten products representing the mix manufactured by Randazzo.

In addition to the variable costs indentified in Exhibit A the accountant estimated $600,000 of fixed costs would be associated with the production of these ten products.

Products A, B, C, D, E, F, G, H, I, J

Sales volume in units (x 1,000) 50, 80, 10, 20, 70, 25, 5, 12, 11, 15

Selling price per unit- $12, $15, $2, $10, $15, $10, $2, $5, $5, $6

Variable cost $10, $11, $3, $8, $10, $8, $4, $4, $5, $6

Assume $70,000 of the $600,000 in fixed costs can be saved if products C and G are dropped.

What is the total benefit to the company of dropping the two products? SOLUTION