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The management of Therriault Corp. is considering dropping product U51Y. Data from the accounting system appear below: Sales.......$980,000/ / Variable expenses..........$568,000/// Fixed Manufacturing expenses...............$314,000/// Fixed Selling and Admin. Expenses.........$196,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $280,000 of the fixed manufacturing expenses and $140,000 of the fixed selling and admin. expenses are avoidable if product U51Y is discontinued. What would be the effect on the company's overall net operating income if product U51Y were dropped? Should the product be dropped??

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Accounting Basics, Accounting

Category:- Accounting Basics
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