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Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales $830,000 Variable expenses $416,000 Fixed manufacturing expenses $266,000 Fixed

Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below:

Sales $830,000
Variable expenses $416,000
Fixed manufacturing expenses $266,000
Fixed selling and administrative expenses $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 D14E is discontinued.

Required:

a. According to the company's accounting system, what is the net operating income earned by product D14E? (Net losses should be indicated by a minus sign.)

b. What would be the financial advantage (disadvantage) of dropping product D14E?

Should the product be dropped?

image text in transcribed

et operating income (loss) $ (66,000) b. Financial advantage (disadvantage) The product | dropped

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