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What would be financial advantage from dropping product

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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:

Sales $830,000

Variable expenses $390,000

Fixed manufacturing expenses $266,000

Fixed selling and administrative expenses $232,000

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.

Required - What would be the financial advantage (disadvantage) from dropping product D74F?

Reference no: EM133180932

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