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Management of Corporation is considering dropping its Chili product line. Data from the company's accounting system related to this line product appear below: Sales $720,000
Management of Corporation is considering dropping its Chili product line. Data from the company's accounting system related to this line product appear below:
Sales | $720,000 |
Variable expenses | $374,000 |
Fixed manufacturing expenses | $245,000 |
Fixed selling and administrative expenses | $209,000 |
Further investigation has revealed that $173,000 of the fixed manufacturing expenses and $150,000 of the fixed selling and administrative expenses are avoidable if the Chili product line is discontinued.
What would be the increase (decrease) in net operating income if the Chili product line is discontinued?
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