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The management of Schmader Corporation is considering dropping product H15B. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed
The management of Schmader Corporation is considering dropping product H15B. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $550,000 $242,000 $215,000 $142,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $79,000 of the fixed manufacturing expenses and $137,000 of the fixed selling and administrative expenses are avoidable if product H15B is discontinued. Required: a. What is the net operating income earned by product H15B according to the company's accounting system? b. Determine the financial advantage (disadvantage) for the company of dropping product H15B. Should the product be dropped
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