Question
Premium Blue is considering dropping product orange jeans. Data from the company's accounting system appear below: Sales $630,000 Variable Expenses $300,000 Fixed Manufacturing Expenses $300,000
Premium Blue is considering dropping product orange jeans. Data from the company's accounting system appear below: Sales $630,000 Variable Expenses $300,000 Fixed Manufacturing Expenses $300,000 Fixed Selling and Administrative Expenses $250,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that 22% of the fixed manufacturing expenses and 76% of the fixed selling and administrative expenses are avoidable if product orange jeans is discontinued. Question: How much will the company's overall net operating income increase or decrease if it drops product orange jeans?
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