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Drop or Retain Segment The management of Therriault Corporation is considering dropping product U51Y. Data from the company's accounting system appear below: All fixed expenses
Drop or Retain Segment The management of Therriault Corporation is considering dropping product U51Y. 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 $280,000 of the fixed manufacturing expenses and $140,000 of the fixed selling and administrative expenses are avoidable if product U51Y is discontinued. Required: What would be the effect on the company's overall net operating income if product U51Y were dropped? Should the product be dropped? Show your work
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