The management of Freshwater Corporation is considering dropping product C11B. D
ID: 2490109 • Letter: T
Question
The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $223,000 of the fixed manufacturing expenses and $134,000 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.
According to the company's accounting system, what is the net operating income earned by product C11B?
$98,000
$(521,000)
$(98,000)
$521,000
The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below:
Explanation / Answer
STATEMENT SHOWING NET OPERATING INCOME Sales $942,000 Less; Variable expenses $421,000 Fixed manufacturing expenses $356,000 Fixed selling and administrative expenses $263,000 Net Operating Income -98000 Answer is C ($98000)
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