Question
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000 per year; variable expenses total $340,000
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000 per year; variable expenses total $340,000 per year. Fixed expenses charged to the product total $220,000 per year. The company estimates that $180,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would:
Select one:
a. increase by $20,000 per year
b. decrease by $120,000 per year
c. decrease by $20,000 per year
d. increase by $40,000 per year
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