The Management of Schmader Corporation Is Considering Dropping Product M12C

question 60

Essay

The management of Schmader Corporation is considering dropping product M12C.Data from the company's accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company's accounting system.Further investigation has revealed that $137,000 of the fixed manufacturing expenses and $79,000 of the fixed selling and administrative expenses are avoidable if product M12C is discontinued.
Required:
a.What is the net operating income earned by product M12C according to the company's accounting system? Show your work!
b.Determine the financial advantage (disadvantage)for the company of dropping product M12C.Should the product be dropped? Show your work!

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Definitions:

Resource Allocation

The process of distributing and managing resources (such as time, money, or personnel) among various projects or departments within an organization to maximize efficiency and achieve strategic goals.

Status Effects

Conditions applied to characters or entities in a game that modify their abilities, behavior, or statistics, often temporarily.

Corporate Cover-Ups

involve deliberate attempts by a company to conceal wrongdoing, mistakes, or unethical behavior from the public, regulators, or other relevant stakeholders to protect its reputation and interests.