Little Cory Corporation is considering dropping product G410. Data from the company's accounting system appear below: Sales
Question:
Little Cory Corporation is considering dropping product G410. Data from the company's accounting system appear below:
Sales $450,000
Variable Expenses $185,000
Fixed manufacturing expenses $149,000
Fixed selling and administrative expenses $113,000
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G410 is discontinued.
A. according to the company's accounting system, what is the operating income earned by product G410?
B. What would be the effect on the company's overall net operating income of dropping product G410? Should the product be dropped?