Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:
A) $15,000
B) $143,000
C) ($143,000)
D) ($15,000)

Question

Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below:  In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:
A) $15,000 
B) $143,000 
C) ($143,000) 
D) ($15,000)

Quizplus · Accepted Answer

11eacbfc_c632_3eac_8ffe_0f668cd8fd79_TB7552_00 The segment margin of $143,000 would be lost if product U23N were dropped.

Product U23N Has Been Considered a Drag on Profits at Jinkerson