The Management of Bonga Corporation Is Considering Dropping Product D74F

question 194

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

• A) $226,000
• B) $58,000
• C) ($226,000)
• D) ($58,000)

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Definitions:

Pituitary Gland

A small endocrine gland in the brain controlling various physiological processes through the release of hormones.

Bloodstream

The flowing blood within the circulatory system of the body, carrying oxygen, nutrients, and waste products to and from the tissues.

Neurotransmitters

Chemical substances in the brain that transmit signals from one neuron to another, playing a key role in the function of the nervous system.

Synaptic Vesicles

Tiny sacs within a synapse that release neurotransmitters, enabling neuron communication.