Effect on the company overall net operating income

Assignment Help Accounting Basics
Reference no: EM13147047

The management of Austin Corporation is considering dropping product R97C. Data from the company's accounting system appear below:

Sales....................................$130,000
Variable expenses..........................56,000
Fixed manufacturing expenses...............49,000
Fixed selling and administrative expenses..35,000

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $34,000 of the fixed manufacturing expenses and $20,000 of the fixed selling and administrative expenses are avoidable if product R97C is discontinued. What would be the effect on the company's overall net operating income if product R97C were dropped?

A) Overall net operating income would increase by $20,000.
B) Overall net operating income would increase by $10,000.
C) Overall net operating income would decrease by $20,000.
D) Overall net operating income would decrease by $10,000.

Reference no: EM13147047

Questions Cloud

Journal entries for the original purchase : On February 12, 6, 000 shares of Lucas Company are acquired at a price of $22 per share plus a $240 brokerage fee. Prepare the journal entries for the original purchase, dividend and sale.
Explain perform the degrees-of-freedom analysis : perform the degrees-of-freedom analysis and calculate the rates of (1) fresh propane feed, (2) propane entering and (3) exiting the reactor
What is surface tension : if the ethyl alcohol at 35 degree rise through 8.36 cm in a capillary tube of radius 0.20 mm , What is surface tension
Determining sale of the land realized : On November 8, 2003, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized?
Effect on the company overall net operating income : Further investigation has revealed that $34,000 of the fixed manufacturing expenses and $20,000 of the fixed selling and administrative expenses are avoidable if product R97C is discontinued. What would be the effect on the company's overall net o..
Choose the appropriate units using the drop-down list : Choose the appropriate units using the drop-down list. energy cost of playing soccor is 7.0.
Use of a subsidiary ledger and allowance account : Describe how accounts receivable arise and how they are accounted for, including the use of a subsidiary ledger and an allowance account.
Find the molecular weight of the unknown compound : Find the molality of the solution. Find the molecular weight of the unknown compound please show steps
Compute the expected new net income : As a result, they estimate that gross profit will increase by $37,605 and operating expenses by $62,595. Compute the expected new net income. (Hint: You do not need to prepare an income statement).

Reviews

Write a Review

Accounting Basics Questions & Answers

  Concept earnings per share

Santana Corporation has 400,000 shares of common stock outstanding throughout 2010. In addition, the corporation has 5,000, 20-year, 7% bonds issued at par in 2008. Each $1,000 bond is convertible into 20 shares of common stock after 9/23/11. Duri..

  Deduction on her individual tax return

Dawn Adams owns 60 percent of a calendar-year S corporation during 2008. Her stock basis on December 31, 2008, is $17,000, and her debt basis is $2,000. If the S corporation incurs a $48,000 loss for 2009, what amount may Ms. Adams deduct on her i..

  Accounting for business activities

Which of the following is a true statement about accounting for business activities?

  Journal entries for contingencies

Prepare journal entries that should be recorded as a result of each of the above contingencies. If no journal entry is needed, briefly explain why.

  Concerning a taxpayer requirement

Concerning a taxpayer's requirement to make quarterly estimated tax payments:

  Bamboo dividends received deduction

A. What is Bamboo's dividends received deduction? B. How would your answer change if the gross income from operations was $140,000 instead of $200,000?

  What happens to contribution margin per unit

Based on the formulas you have reviewed, what happens to contribution margin per unit when unit selling prices increase? Illustrate your explanation with an example from a fictitious company of how an increase in unit selling prices might affect cont..

  Weighted-average process-costing system

Strawberry Company uses a weighted-average process-costing system. Company records disclosed that the firm completed 40,000 units during the month and had 10,000units in process at month-end,20% complete.

  Non-recurring expenses on income statement

When normalizing operating results, non-recurring expenses that are reported within SG&A, CGS or other expense line items on a company's income statement:

  Evaluate the impact to a business

Evaluate the impact to a business when compensation, such as sales commissions and bonus, are tied to achieving budgeted expectations. Suggest how management can prevent employees from manipulating results.

  Computer-assisted audit technique

What are the advantages and disadvantages of the computer-assisted audit technique known as parallel simulation?

  Treasury stock transaction using cost method

Jones accounts for its treasury stock transaction using the cost method. What amount would Jones report as Common Stock in the equity section of its December 31 balance sheet?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd