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Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows: Gyros Falafel Units sold 9,500 6,300 Revenue $85,500
Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows:
Gyros | Falafel | |
Units sold | 9,500 | 6,300 |
Revenue | $85,500 | $37,800 |
Variable Costs | $38,000 | $19,900 |
Traceable Fixed Costs | $19,000 | $12,500 |
Allocated Fixed Costs | $7,000 | $6,500 |
Total | $21,500 | -$1,100 |
Aladdin's is considering dropping the falafel segment. If it is dropped, 28% of allocated fixed costs are avoidable and 100% of traceable fixed costs are avoidable. In addition, if the segment is dropped, Aladdin's can sell special equipment used to make falafel for $850.
If the Falafel segment is dropped, what will the new net operating income be?
Round your answer to the nearest dollar.
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