18. The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below:

Sales	$	940,000
Variable expenses	$	414,000
Fixed manufacturing expenses	$	354,000
Fixed selling and administrative expenses	$	261,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $216,000 of the fixed manufacturing expenses and $127,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued.

What would be the financial advantage (disadvantage) from dropping product D74F?

Garrison 16e Rechecks 2017-11-13, 2017-12-15

Multiple Choice

($89,000)

$183,000

$89,000

($183,000)