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:

Sales	$ 921,000
Variable expenses	$ 400,000
Fixed manufacturing expenses	$ 335,000
Fixed selling and administrative expenses	$ 242,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $202,000 of the fixed manufacturing expenses and $113,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued.

According to the company's accounting system, what is the net operating income (loss) earned by product D74F? Include all costs in this calculationwhether relevant or not.

multible choice

• $56,000

• ($521,000)

• ($56,000)

• $521,000

question 2

Otool Incorporated is considering using stocks of an old raw material in a special project. The special project would require all 160 kilograms of the raw material that are in stock and that originally cost the company $2,336 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $8 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $7.15 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $87 for all 160 kilograms. What is the relevant cost of the 160 kilograms of the raw material when deciding whether to proceed with the special project?

Multiple Choice

• $1,144Incorrect

• $1,057

• $1,252

• $1,256

question 3

The management of Furrow Corporation is considering dropping product L07E. Data from the companys budget for the upcoming year appear below:

Sales	$ 970,000
Variable expenses	$ 382,000
Fixed manufacturing expenses	$ 364,000
Fixed selling and administrative expenses	$ 244,000

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $221,000 of the fixed manufacturing expenses and $182,000 of the fixed selling and administrative expenses are avoidable if product L07E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:

Multiple Choice

• $(20,000)

• $185,000Incorrect

• $20,000

• $(185,000