The management of Freshwater Corporation is considering dropping product C11B. Data from the company\'s accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company\'s accounting system. Further investigation has revealed that $213,000 of the fixed manufacturing expenses and $124,000 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.
What would be the effect on the company\'s overall net operating income if product C11B were dropped?
Overall net operating income would decrease by $186,000.
Overall net operating income would increase by $80,000.
Overall net operating income would decrease by $80,000.
Overall net operating income would increase by $186,000.
Solution
-80000
If Product is discontinued
-186000
Overall net operating income would decrease by 186000
.
Ecological Succession. ( ECOSYSTEM, B. Pharmacy, 1st Year, Sem-II, Environmen...
The management of Freshwater Corporation is considering dropping produ.docx
1. The management of Freshwater Corporation is considering dropping product C11B. Data from
the company's accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company's accounting
system. Further investigation has revealed that $213,000 of the fixed manufacturing expenses
and $124,000 of the fixed selling and administrative expenses are avoidable if product C11B is
discontinued.
What would be the effect on the company's overall net operating income if product C11B were
dropped?
Overall net operating income would decrease by $186,000.
Overall net operating income would increase by $80,000.
Overall net operating income would decrease by $80,000.
Overall net operating income would increase by $186,000.
The management of Freshwater Corporation is considering dropping product C11B. Data from
the company's accounting system appear below:
Solution
-80000
If Product is discontinued
-186000
Overall net operating income would decrease by 186000
Particulars Amount
Sales 934000
Less: Variable expenses 411000
2. Contribution Earned 523000
Fixed manufacturing expenses 348000
Fixed selling and administrative expenses 255000
Net Income -80000
