Question
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: All
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below:
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $209,000 of the fixed manufacturing expenses and $120,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued.
What would be the financial advantage (disadvantage) from dropping product D74F?
Multiple Choice
$190,000
$68.000
($68,000)
($190,000)
\begin{tabular}{lr} Sales & $926,000 \\ Variable expenses & $407,000 \\ Fixed manufacturing expenses & $340,000 \\ Fixed selling and administrative expenses & $247,000 \end{tabular}Step by Step Solution
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