Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below: Sales $ 830,000 Variable expense $ 416,000 Fixed manufacturing expenses

Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below: Sales $ 830,000 Variable expense $ 416,000 Fixed manufacturing expenses $ 266,000 Fixed selling and administrative expense $ 214,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $204,000 of the fixed manufacturing expenses and $119,000 of the fixed selling and administrative expenses are avoidable if product N28X is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product N28X? (Input the amount as a positive value. Omit the "$" sign in your response.) $ 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. Omit the "$" sign in your response.) Net operating income would be by $ . b-2. Should the product be dropped? Yes or No?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions