Question
Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below: Sales $ 730,000 Variable expense $ 336,000 Fixed manufacturing expenses
Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below: |
Sales | $ | 730,000 |
Variable expense | $ | 336,000 |
Fixed manufacturing expenses | $ | 256,000 |
Fixed selling and administrative expense | $ | 204,000 |
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All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $199,000 of the fixed manufacturing expenses and $114,000 of the fixed selling and administrative expenses are avoidable if product N28X is discontinued. |
Required: |
1. | What would be the effect on the company's overall net operating income of dropping product N28X? (Input the amount as a positive value. Omit the "$" sign in your response.) |
Net operating income would be (Click to select)increasedecrease by $ . |
2. | Should the product be dropped? | ||||
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