The management of Your Corporation is considering dropping a product. Data from the company's accounting system appear below: Sales $40,000 VC $15,000 Fixed manufacturing costs $19,000 Fixed selling and administrative costs $11,000 Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped? Group of answer choices decrease by $7,000 increase by $7,000 increase by $13,000 decreased by $25,000 decreased by $13,000
The management of Your Corporation is considering dropping a product. Data from the company's accounting system appear below: Sales $40,000 VC $15,000 Fixed manufacturing costs $19,000 Fixed selling and administrative costs $11,000 Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped? Group of answer choices decrease by $7,000 increase by $7,000 increase by $13,000 decreased by $25,000 decreased by $13,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The management of Your Corporation is considering dropping a product. Data from the company's accounting system appear below:
Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped?
|
Sales
|
$40,000
|
|
VC
|
$15,000
|
|
Fixed
|
$19,000
|
|
Fixed selling and administrative costs
|
$11,000
|
Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped?
Group of answer choices
decrease by $7,000
increase by $7,000
increase by $13,000
decreased by $25,000
decreased by $13,000
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