The management of Therriault Corporation is considering dropping product U51Y. Data from the company's accounting...
80.2K
Verified Solution
Link Copied!
Question
Accounting
The management of Therriault Corporation is considering dropping product U51Y. Data from the company's accounting system appear below:
Sales: $980,000
Variable expenses: $568,000
Fixed manufacturing expenses: $314,000
Fixed selling and administrative expenses: $196,000
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $280,000 of the fixed manufacturing expenses and $140,000 of the fixed selling and administrative expenses are avoidable if product U51Y is discontinued.
What would be the effect on the company's overall net operating income if product U51Y were dropped? Should the product be dropped? Please show your work!
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
