H K M D E G 1 Warrior Corporation is considering dropping product LR423 from...
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Accounting
H K M D E G 1 Warrior Corporation is considering dropping product LR423 from its product line. 2 The following data is from the company's accounting system. 3 as is es in 4 Sales $ 690,000 5 Variable expenses 304,000 6 Fixed manufacturing expenses $ 223,000 7 Fixed selling and administrative expenses $ 197,000 8 9 All fixed expenses of the company are fully allocated to products in the company's accounting system 10 Further investigation has revealed that $180,000 of the fixed manufacturing expenses and $94,000 of the fixed 11 selling and administrative expenses are avoidable if the product is discontinued. 12 13 Required: a) According to the company's accounting system, what is the net operating income (loss) earned by 14 product LR423? 15 b) What would be the effect on the company's overall net operating income if product LR423 were 16 dropped? 17 18 c) Should the product be dropped? 19 20 SHOW YOUR WORK! 21
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