13. The management of Fannin Corporation is considering dropping product H58S. D

Question

13. The management of Fannin Corporation is considering dropping product H58S. Data from the company's accounting system appear below:

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $239,000 of the fixed manufacturing expenses and $200,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped?

A Overall net operating income would increase by $120,000.

B Overall net operating income would decrease by $120,000.

C Overall net operating income would decrease by $67,000.

D Overall net operating income would increase by $67,000.

14. Nash Corporation manufactures and sells custom snowmobiles. From the time an order is placed till the time the snowmobile reaches the customer averages 127 days. This 127 days is spent as follows:

What is Nash's manufacturing cycle efficiency (MCE) for its snowmobiles? (Round you answer to 1 decimal place.)

A 30.7%

B 59.1%

C 40.9%

D 57.5%

13. The management of Fannin Corporation is considering dropping product H58S. Data from the company's accounting system appear below:

Explanation / Answer

MCE = Value added time / Throughput time

= Process time / ( Move + Process + Queue + Inspection) Time

= 31 / (21+31+28+21 ) = 30.7 %

Dear Student,

The first question lacks information regarding the effect on sales if the product H%* is dropped. Please provide the same for a correct solution.

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