Management is considering discontinuing product altogether

Assignment Help Financial Accounting

Reference no: EM13825137

Product R19N has been considered a drag on profits at Buzzeo Corporation for some time and management is considering discontinuing the product altogether. Data from the company's accounting system appear below:

Sales $308,000

Variable expenses $135,800

Fixed manufacturing expenses $117,800

Fixed selling and administrative expenses $80,200

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $49,400 of the fixed manufacturing expenses and $40,300 of the fixed selling and administrative expenses are avoidable if product R19N is discontinued. What would be the effect on the company's overall net operating income if product R19N were dropped?

Reference no: EM13825137

Questions Cloud

Explain the strict scrutiny : What must a plaintiff demonstrate to hold a hospital vicariously liable for a physician's medical malpractice and what are the several ways of proving this? Explain the "strict scrutiny" standard and in what situations courts will use that test.

What is the direct materials quantity variance : Bradford Company budgeted 4,750 pounds of material costing $6.5 per pound to produce 2,375 units. The company actually used 12,000 pounds that cost $6.6 per pound to produce 3,500 units. What is the direct materials quantity variance?

Case study: ford motor company aligned business framework : Case Study: Ford Motor Company Aligned Business Framework

Discuss methods used to account for investments : Discuss methods used to account for investments in a consolidated financial statement. Explain journal entries on the parent's books to account for an investment using the cost method, the partial equity method, and the complete equity method.

Management is considering discontinuing product altogether : Product R19N has been considered a drag on profits at Buzzeo Corporation for some time and management is considering discontinuing the product altogether. What would be the effect on the company's overall net operating income if product R19N were dro..

Explain what is meant by measurement in accounting : Discuss the above statement. Ensure you explain what is meant by measurement in accounting and what are the issues and problems that arise with measurement

Write a short summary about the given article : The problem belongs to Economics and it is explain about writing a short summary for the article. The article is Optimal pricing strategies under co-existence of price-takers and bargainers in a supply chain by C-W Kuo, R-S Guo and Y-F Wu (2012).

Explain michigan good samaritan law : Explain Michigan's Good Samaritan Law and explain why it is or is not good public policy. Under what circumstances may a minor consent to medical treatment without parental consent?

Journal entry when you purchase inventory stock items : What is the correct journal entry when you purchase inventory stock items. The report that lists all the accounts and the identifying number assigned to each account is called: The inventory item class used to identify goods purchased and held for re..

User Account

All Pages