Question
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales $936,000 Variable expenses $415,000 Fixed manufacturing
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: |
Sales | $936,000 |
Variable expenses | $415,000 |
Fixed manufacturing expenses | $350,000 |
Fixed selling and administrative expenses | $257,000 |
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $217,000 of the fixed manufacturing expenses and $128,000 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. |
$86,000
$(521,000)
$(86,000)
$521,000
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