Question
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales $939,000 Variable expenses $418,000 Fixed manufacturing
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: |
Sales | $939,000 |
Variable expenses | $418,000 |
Fixed manufacturing expenses | $353,000 |
Fixed selling and administrative expenses | $260,000 |
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $220,000 of the fixed manufacturing expenses and $131,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued. |
According to the company's accounting system, what is the net operating income earned by product V41B? Include all costs in this calculationwhether relevant or not. |
$521,000
$92,000
$(92,000)
$(521,000)
Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $52 to buy from farmers and $14 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $28 or processed further for $20 to make the end product industrial fiber that is sold for $40. The beet juice can be sold as is for $48 or processed further for $32 to make the end product refined sugar that is sold for $74. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is? |
rev: 08_07_2013_QC_33489
$(6)
$(8)
$(60)
$(35)
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