The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued.
According to the company's accounting system, what is the net operating income earned by product D74F? Include all costs in this calculation-whether relevant or not.
A) ($58,000)
B) ($440,000)
C) $58,000
D) $440,000

Question

The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below:  All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued.
According to the company's accounting system, what is the net operating income earned by product D74F? Include all costs in this calculation-whether relevant or not.
A) ($58,000) 
B) ($440,000) 
C) $58,000 
D) $440,000

Quizplus · Accepted Answer

11eacbfc_c63c_c552_8ffe_b395d565ae7b_TB7552_00

The Management of Bonga Corporation Is Considering Dropping Product D74F