The Baynton-Power Co. makes collections on all sales according to the following schedule: 20% in month of sale 80% in month following sale The following is a list of budgeted sales for the next four quarters: 1st quarter $1,000,000 2nd quarter $1,050,000 3rd quarter $980,000 4th quarter $995,000 Budgeted Sales a. $994,000 C. $980,000 d. $992,000 e. $983,000 QUESTION 13 The management of the Flyin' Illini t-shirt Co. has been concerned for some time with the financial performance of its Blue t-shirt line and has considered discontinuing it on several occasions. Accounting information for the firm for last year appears below: Sales Variable manufacturing costs Fixed manufacturing costs Gross Margin Variable non-manufacturing costs Fixed non-manufacturing costs Net Operating Income (Loss) Orange $900,400 $250,000 $125,000 $525,400 $84,000 $77,500 $363,900 Blue $305,000 $150,000 $95,000 $60,000 $78,000 $68,000 ($86,000) Grey $420,000 $100,000 $60,000 $260,000 $40,500 $35,000 $184,500 The accountant for the company estimates that $50,000 of the fixed manufacturing expenses and $48,000 of the fixed non-manufacturing expenses could be avoided if the Blue t-shirt line is discontinued. Assume all variable costs could be avoided if the Blue t-shirt line is discontinued and that dropping the Blue t-shirt line would have no effect on the other t-shirt lines. What would be the financial advantage (disadvantage) from dropping the Blue t-shirt line? a. $98,000 b. ($65,000) C. ($77,000) d. $21,000 e. $86,000