Solution-What would be the financial advantage of dropping

What would be the financial advantage of dropping product

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Reference no: EM132461140

Question - Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below:

Sales	$720,000
Variable expenses	$331,000
Fixed manufacturing expenses	$255,000
Fixed selling and administrative expenses	$203,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $198,500 of the fixed manufacturing expenses and $113,500 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued.

Required - Please complete the following:

1. According to the company's accounting system, what is the net operating income earned by product D14E?

2. What would be the financial advantage (disadvantage) of dropping product D14E?

3. Should the product be kept or dropped?

Reference no: EM132461140

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What would be the financial advantage of dropping product

Reference no: EM132461140

Reference no: EM132461140

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