ch 13 questions 15-19 - A) Overall net operating income...

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A) Overall net operating income would increase by $8,000. B) Overall net operating income would decrease by $173,000. C) Overall net operating income would decrease by $8,000. D) Overall net operating income would increase by $173,000 Answer is B) Solution: Keep the Product Drop the Product Difference Sales. .............................................. $830,000 $ 0 ($830,000) Variable expenses. ......................... 365,000 0 365,000 Contribution margin. ...................... 465,000 0 (465,000 ) Fixed expenses: Fixed manufacturing expenses. ... 291,000 *105,000 186,000 Fixed selling and administrative expenses. ................................. 166,000 **60,000 106,000 Total fixed expenses. ..................... 457,000 165,000 292,000 Net operating income (loss). .......... $ 8,000 ($165,000 ) ($173,000 ) Net operating income would decline by $173,000 if product L07E were dropped. Therefore, the product should not be dropped.
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ch 13 questions 15-19 - A) Overall net operating income...

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