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State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past quarter. The past three months of information for Model A02777
State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past quarter. The past three months of information for Model A02777 are summarized below: Sales (1,000 units) Manufacturing costs $390,000 Direct materials 190,000 100,000 120,000 ($20,000) Direct labor ($15 per hour) Overhead Operating loss Overhead costs are 60% variable and he remaining 40 IS depreciation of special equipment or mo e A If Model A02777 is dropped from the product line, operating income will O A. decrease by $20,000 OB. increase by $48,000 OC. increase by $20,000 O D. decrease by $28,000 777 hat as n res ae va
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