Product X has been considered a drag on profits at A Corporation for some time and...

 

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Product X has been considered a drag on profits at A Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $730,000 $350,000 $234,000 $161,000 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 X 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) Product X has been considered a drag on profits at A Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $730,000 $350,000 $234,000 $161,000 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 X 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)

Answer rating: 100% (QA)

To determine the financial advantage or disadvantage for the company of eliminating product X for th... View the full answer