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Bow Wow Products manufactures dog biscuits that are advertised to help with digestion. Sales for these biscuits have been less than some of their
Bow Wow Products manufactures dog biscuits that are advertised to help with digestion. Sales for these biscuits have been less than some of their other products, and management at Bow Wow is considering whether they would discontinue the manuacture and sale of the dog biscuits. The Bow Wow cost accountants have compiled the following information regarding the dog biscuit product line: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 832,500 $ 432,500 $ 282,800 $ 241,400 The cost accountants have determined that $200,000 of the fixed manufacturing expenses would be avoidable if the dog biscuits product line was discontinued. In addition, $173,400 of the fixed selling and administrative expenses would be avoidable. Required: How would you advise management at Bow Wow Products? Should the dog biscuit product line be dropped? Net operating income (loss) would by if the dog biscuit product line was dropped. Therefore, the product dropped
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