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Blue Devil Inc. is considering dropping product X5. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated
Blue Devil Inc. is considering dropping product X5. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $72,000 of the fixed manufacturing expenses and $48,000 of the fixed selling and administrative expenses are avoidable if product X5 is discontinued. Required (15 points): a. According to the company's accounting system, what is the net operating income earned by product X5? b. What would be the financial advantage (disadvantage) of dropping product X5? Should the product be dropped
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