Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

23. The product F500 has been considered a drag on profits at Vinson Company for some time, and the management is considering discontinuing the product

23. The product F500 has been considered a drag on profits at Vinson Company for some time, and the management is considering discontinuing the product altogether. Given below is data taken from the companys accounting system in relation to the sales and the variable expenses associated with this product along with all the fixed expenses. Further investigation has revealed that $41,000 of the fixed manufacturing expenses and $25,000 of the fixed selling and administrative expenses are avoidable if the product F500 is discontinued. What is the effect on the company's overall net operating income if the product F500 is dropped?
a)The overall net operating income will decrease by $10,000.
b)The overall net operating income will increase by $10,000.
c)The overall net operating income will decrease by $73,000.
d)The overall net operating income will increase by $73,000.
e)None of the above.
image text in transcribed
Item: Sales Variable Expenses Fixed Manufacturing Expenses Fixed Selling and Administrative Expenses Amount $240,000 $101,000 $94,000 $55,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Basics Of IT Audit Purposes Processes And Practical Information

Authors: Stephen D. Gantz

1st Edition

0124171591, 978-0124171596

More Books

Students also viewed these Accounting questions

Question

4. Identify the challenges facing todays organizations

Answered: 1 week ago