The management of NUBDCorporation is considering dropping product D4. Data from the company's accounting system appear below: Sales "Variable expenses Fixed manufacturing expenses. Fixed selling and administrative expenses. P830,000 P390,000 P266,000 P232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that 50% of the fixed manufacturing expenses and P105,000 of the fixed selling and administrative expenses are avoidable if product D4 is discontinued.
The management of NUBDCorporation is considering dropping product D4. Data from the company's accounting system appear below: Sales "Variable expenses Fixed manufacturing expenses. Fixed selling and administrative expenses. P830,000 P390,000 P266,000 P232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that 50% of the fixed manufacturing expenses and P105,000 of the fixed selling and administrative expenses are avoidable if product D4 is discontinued.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What would be the effect on the company's overall net operating income if product D4 were dropped?
Transcribed Image Text:The management of NUBDCorporation is considering dropping product D4. Data
from the company's accounting system appear below:
Sales
Variable expenses.
Fixed manufacturing expenses.
Fixed selling and administrative expenses.
P830,000
P390,000
P266,000
P232,000
All fixed expenses of the company are fully allocated to products in the company's
accounting system. Further investigation has revealed that 50% of the fixed
manufacturing expenses and P105,000 of the fixed selling and administrative
expenses are avoidable if product D4 is discontinued.
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