Tjelmeland Corporation is considering dropping product S85U. Data from the company's accounting system appear below.

 

Sales

$360,000

Variable Expenses

$158,000

Fixed Manufacturing Expenses

$119,000

Fixed Selling and Administrative Expenses

$94,000

 


All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $55,000 of the fixed manufacturing expenses and $71,000 of the fixed selling and administrative expenses are avoidable if product S85U is discontinued.

Required:

i. According to the company's accounting system, what is the net operating income earned by product S85U? Show your work!

ii. What would be the effect on the company's overall net operating income of dropping product S85U? Should the product be dropped? Show your work! (Points : 15 )

Answers

Related Questions

8 important final MCQs...

5.an investor-owned enterprise, is currently 100% equity financed. The CFO is considering a recapitalization plan u...

Strayer Bus302 week 6 quiz 5 (august 2014)...

Question 1 The two general kinds of trade barriers are ____. Answer government import stan...

Week 6 Homework (BUS2300XA) 6-33 — 6-37...

6­33For or From AGI Deductions. Roberta is an accountant employed by a local firm. During theyear, Roberta incurs the...

When did Illicit Drug Use attract National attenti...

When did Illicit Drug Use attract National attention in the USA?Was there any debate about how illegal drug use sho...

Operation Management Problems...

1. Schedule the following activities using CPM: Activity Time Pred 1 Pred 2 A...

BUSN – Riordan Manufacturing Company Paper...

Develop the flow diagram of the information and any control elements needed to ensure proper access for the information...

If you didn't find the right answer

Ask Your Questions, We'll notify you once someone answers it