Question
The management of XYZ Corporation is considering dropping product LABE. Data from the companys budget for the upcoming year appear below: Sales $ 980,000 Variable
The management of XYZ Corporation is considering dropping product LABE. Data from the companys budget for the upcoming year appear below:
Sales
$
980,000
Variable expenses
$
394,000
Fixed manufacturing expenses
$
376,000
Fixed selling and administrative expenses
$
256,000
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $245,000 of the fixed manufacturing expenses and $206,000 of the fixed selling and administrative expenses are avoidable if product LABE is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:
A. ($46,000)
- B. $135,000
- C. $46,000
- D. ($135,000)
The management of XYZ Corporation is considering dropping product LABE. Data from the companys budget for the upcoming year appear below:
|
|
|
Sales | $ | 980,000 |
Variable expenses | $ | 394,000 |
Fixed manufacturing expenses | $ | 376,000 |
Fixed selling and administrative expenses | $ | 256,000 |
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $245,000 of the fixed manufacturing expenses and $206,000 of the fixed selling and administrative expenses are avoidable if product LABE is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:
|
A. ($46,000)
- B. $135,000
- C. $46,000
- D. ($135,000)
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Corporate Finance A Focused Approach
Authors: Michael C. Ehrhardt, Eugene F. Brigham
6th edition
1305637100, 978-1305637108
