Little Cory Corporation is considering dropping product G41O. 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 $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G41O is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product G41O? b. What would be the effect on the company's overall net operating income of dropping product G41O? Should the product be dropped? There is not a word length requirement for this question; however, you must show your work. sales 450,000 variable expenses 185,000 fixesd manufacturing expenses 149,000 fixed selling and administered expenses 113,000
Little Cory Corporation is considering dropping product G41O. 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 $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G41O is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product G41O? b. What would be the effect on the company's overall net operating income of dropping product G41O? Should the product be dropped? There is not a word length requirement for this question; however, you must show your work. sales 450,000 variable expenses 185,000 fixesd manufacturing expenses 149,000 fixed selling and administered expenses 113,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Little Cory Corporation is considering dropping product G41O. 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 $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G41O is discontinued.
Required:
a. According to the company's accounting system, what is the net operating income earned by product G41O?
b. What would be the effect on the company's overall net operating income of dropping product G41O? Should the product be dropped?
There is not a word length requirement for this question; however, you must show your work.
| sales | 450,000 |
| variable expenses | 185,000 |
| fixesd manufacturing expenses | 149,000 |
| fixed selling and administered expenses | 113,000 |
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