Product U23N Has Been Considered a Drag on Profits at Jinkerson

question 192

Multiple Choice

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)

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Definitions:

Criticize

To express disapproval of someone or something based on perceived faults or mistakes.

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An individual with extensive knowledge or skill in a particular area or field.

Creativity

The ability to generate novel and valuable ideas, products, or solutions to problems.

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The act of repeatedly performing activities or exercises to acquire or improve a skill.