Calculate the net operating profit-loss

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Question - ABC Co. is considering dropping product A and provided the following information.

Sales $740,000

Variable expenses $341,000

Fixed manufacturing expenses $257,000

Fixed administrative expenses $205,000

If product A is discontinued, $199,500 of the fixed manufacturing expenses and $114,500 of the fixed administrative expenses can be avoided.

Required -

a. Calculate the net operating profit/loss earned/incurred by product A.

b. Calculate the profit/loss of dropping product A. Indicate whether product A should be dropped.

Reference no: EM133159180

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