The Management of Bonga Corporation Is Considering Dropping Product D74F

question 23

Multiple Choice

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

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Definitions:

Price of Paper

The cost at which paper is sold or bought in the market.

Complementary

Pertains to goods or services that are often used together, where an increase in demand for one leads to an increase in demand for the other.

Fixed Proportions

A production scenario where inputs must be used in constant ratios, lacking flexibility in substitution or adjustment.

Input

Factors including workforce, materials, and financial assets employed in the process of producing goods and services.