Question
In: Accounting
Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales...
Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below:
| Sales | $ | 620,000 |
| Variable expenses | $ | 255,000 |
| Fixed manufacturing expenses | $ | 236,000 |
| Fixed selling and administrative expenses | $ | 184,000 |
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $193,500 of the fixed manufacturing expenses and $108,500 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued.
Required:
a. According to the company's accounting system, what is the net operating income earned by product D14E? (Net losses should be indicated by a minus sign.)
b. What would be the financial advantage (disadvantage) of dropping product D14E? Should the product be dropped?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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Variable expenses
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