Question
The management of Cackowski Corporation has been concerned for some time with the financial performance of its product I11S and has considered discontinuing it on
The management of Cackowski Corporation has been concerned for some time with the financial performance of its product I11S and has considered discontinuing it on several occasions. Data from the company's accounting system appear below: Sales $760,000 Variable expenses $350,000 Fixed manufacturing expenses $258,000 Fixed selling and administrative expenses $198,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $185,000 of the fixed manufacturing expenses and $132,000 of the fixed selling and administrative expenses are avoidable if product I11S is discontinued. What would be the effect on the company's overall net operating income if product I11S were dropped?
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