Suire Corporation Is Considering Dropping Product D14E

question 151

Essay

Suire Corporation is considering dropping product D14E.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 $72,000 of the fixed manufacturing expenses and $48,000 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued.

Required:
a.According to the company's accounting system, what is the net operating income earned by product D14E? Show your work!
b.What would be the financial advantage (disadvantage)of dropping product D14E? Should the product be dropped? Show your work!

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Definitions:

Bureaucratic Model

A system of administration that operates through a fixed set of rules and procedures, often used in large organizations to ensure consistency and control.

Quasi-judicial Grievance Procedures

These are formal processes used within organizations to resolve disputes between employees and employers, mimicking judicial proceedings.

Flexibility

Flexibility in the workplace refers to the adaptability of work arrangements, such as schedules and tasks, to accommodate both business needs and employees’ personal lives.

Contract Administration

The management of contracts made with customers, vendors, partners, or employees, focusing on ensuring compliance with terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation.