Nutall Corporation is considering dropping product N28X. Data from the company\'

Question

Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below: Sales Variable expense Fixed manufacturing expenses Fixed selling and administrative expense $710,000 $326,000 $254,000 $202,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $198,000 of the fixed manufacturing expenses and $113,000 of the fixed selling and administrative expenses are avoidable if product N28X is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product N28X? (Input the amount as a positive value.) Net operating Income$ 73,000

Explanation / Answer

Solution:

Sales. .................................................................. $710000

Variable expenses . ............................................. 326000

Contribution margin . ......................................... 384000

Fixed expenses:

Fixed manufacturing expenses . ...................... 254000

Fixed selling and administrative expenses . .... 202000

Total fixed expenses . ......................................... 456000

Net operating income (loss). .............................. ($72000)

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