Question
Nestle Corporation has two product lines--BabyRuth and Butterfinger. The product lines have the following revenues and expenses: BabyRuth Butterfinger Sales $ 575,000 $ 490,500 Variable
Nestle Corporation has two product lines--BabyRuth and Butterfinger. The product lines have the following revenues and expenses: BabyRuth Butterfinger Sales $ 575,000 $ 490,500 Variable costs 188,000 259,500 Traceable fixed costs 172,500 195,400 Allocated common corporate costs 122,900 142,100 Net operating income (loss) $ 91,600 $ (106,500 ) Nestle Corporation is deciding whether or not they should discontinue the Butterfinger product line. If the Butterfinger product line was discontinued, its traceable fixed costs could be avoided. Total common corporate costs would not be impacted by this decision. Based on this information provided, discontinuing the Butterfinger product line would result in an overall company net operating income (loss) of:
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