Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales 720,000 Variable expenses...
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Please help me solve this managerial accounting question, thank you so much!

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Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below:
Sales
720,000
Variable expenses
331,000
Fixed manufacturing expenses
255,000
Fixed selling and administrative expenses
203,000
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $198,500 of the fixed manufacturing expenses and $113,500 of the fixed selling and
administrative expenses are avoidable if product D14E is discontinued.
Required:
Please complete the following table: (no decimals)
According to the company's accounting system, what is the net operating income earned by product
$
D14E? (Net losses should be indicated by a minus sign.)
What would be the financial advantage (disadvantage) of dropping product D14E? (indicate an advantage
as a positive or a disadvantage with a minus)
Should the product be kept or dropped?

Top Answer

Let me explain the... View the full answer

1.jpg

1) Net Operating income earned by product D14E
3) Product should be kept or dropped?
Amount $
Sales
720000
Since from the above calculation, we can see that it is a disadvantage to the company...

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