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A company is considering dropping a product line. Data from the company's budget for the upcoming year for this product line appear below: Sales Revenue:
A company is considering dropping a product line. Data from the company's budget for the upcoming year for this product line appear below:
Sales Revenue: | $543,000 |
Variable costs: | $159,000 |
Fixed manufacturing costs: | $232,000 |
Fixed selling and administrative costs: | $130,000 |
Further investigation has revealed that 51% of the fixed manufacturing costs and 33% of the fixed selling and administrative expenses are avoidable if the product were discontinued.
What would be the total annual financial impact from eliminating this product?
(Make sure to calculate the total impact, not the per-unit amount. Use a negative number to indicate a reduction in cash flows.)
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