Question
The management of Bonga Corporation is considering dropping product 074F. Data from the company's accounting system appear below Sales Variable expenses Fixed manufacturing expenses
The management of Bonga Corporation is considering dropping product 074F. Data from the company's accounting system appear below Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $830,000 $390,000 $266,000 $232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed seling and administrative expenses are avoidable if product 074F is discontinued What would be the effect on the company's overall net operating income if product D74F were dropped? Overall net operating income would decrease by 358,000 O Overall net operating income would decrease by $226,000 Overall net operating income would increase by $226,000 Overlating income would increase by $58,000
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