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:

Second-growth Forests

Forests which have re-grown after a significant disturbance, such as logging or a natural event, and are in a secondary stage of development.

Ecological Success

Refers to the process through which ecosystems change and develop over time following a disturbance or initial colonization, leading to a mature or climax community.

Environmental Damage

Negative impacts on the environment due to human activities or natural disasters, leading to destruction, decline, or degradation of natural habitats and resources.

Aspen Parkland

A biome characterized by a mix of aspen forests and prairie grasslands, typically found in certain regions of North America.