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An YYY has the following profitability analysis of its services:

AAA BBB CCC

Revenues $5,000,000 $10,000,000 $3,000,000
Commissions (1,000,000) (2,000,000) (600,000)
Payments (3,000,000) (7,300,000) (2,000,000)
Fixed Cost (500,000) (500,000) (500,000)
Profit $500,000 $200,000 ($100,000)

The fixed costs are distributed equally among the services and are not avoidable if one of the services is dropped.

What is the profitability of the remaining services if all services with losses are dropped? Continue dropping services until there are NO unprofitable services.

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  • Category:- Accounting Basics
  • Reference No.:- M945947

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