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Davis Manufacturing current

Davis Manufacturing current

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Davis Manufacturing currently manufactures product A among other products. The following is the current profit breakdown for product A: Sales Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Selling Costs Profit (Loss) $365,000 $100,000 $75,000 $89,000 $112,000 $(11,000) Davis is considering dropping the product A division. If Davis drops the product 85% of the fixed manufacturing costs and 94% of the fixed selling costs will be eliminated. How much will profit increase or decrease if Davis drops product A? O Decrease $20,070 O Increase $11,000 O Increase $5,000 O Decrease $9,070
Transcribed Image Text:Davis Manufacturing currently manufactures product A among other products. The following is the current profit breakdown for product A: Sales Variable Manufacturing Costs Variable Selling Costs Fixed Manufacturing Costs Fixed Selling Costs Profit (Loss) $365,000 $100,000 $75,000 $89,000 $112,000 $(11,000) Davis is considering dropping the product A division. If Davis drops the product 85% of the fixed manufacturing costs and 94% of the fixed selling costs will be eliminated. How much will profit increase or decrease if Davis drops product A? O Decrease $20,070 O Increase $11,000 O Increase $5,000 O Decrease $9,070
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