Question
Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below: Sales$600,000 Variable expense$241,000 Fixed manufacturing expenses$232,000 Fixed selling and administrative
Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below:
Sales$600,000 Variable expense$241,000 Fixed manufacturing expenses$232,000 Fixed selling and administrative expense$180,000
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $192,500 of the fixed manufacturing expenses and $107,500 of the fixed selling and administrative expenses are avoidable if product N28X is discontinued.
Required:a.According to the company's accounting system, what is the net operating income earned by product N28X? (Input the amount as a positive value.)
b-1.What would be the effect on the company's overall net operating income of dropping product N28X? (Input the amount as a positive value.)
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