The management of Kabanuck Corporation is considering dropping product V41B. Dat
ID: 2597078 • Letter: T
Question
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below:
Sales
$890,000
Variable expenses
$374,000
Fixed manufacturing expenses
$329,000
Fixed selling
$258,000
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $184,000 of the fixed manufacturing expenses and $200,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued.
According to the company's accounting system, what is the net operating income earned by product V41B? Include all costs in this calculation—whether relevant or not.
$71,000
$516,000
$(516,000)
$(71,000)
Sales
$890,000
Variable expenses
$374,000
Fixed manufacturing expenses
$329,000
Fixed selling
$258,000
Explanation / Answer
d.$71,000.
the follwing is the calculation of net operating income:
Sales $890,000 less: variable costs ($374,000) less: fixed manufacturing costs ($329,000) less: fixed selling expenses ($258,000) net operating income ($71,000)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.