The Print Manufacturing Company Manufactures Size 1, Size 2, and Size

question 79

Essay

The Print Manufacturing Company manufactures Size 1, Size 2, and Size 3 printer ribbons to support the printers it manufactures. The managerial accountant reported the following information:
The managerial accountant at Print Manufacturing noted that the Size 3 printer ribbon reports a loss and the managerial accountant needs to determine if the company should drop the Size 3 printer ribbon. What is the increase or decrease in operating income if the operations manager drops the Size 3 printer ribbon and does not replace it? If the managerial accountant recommends that the organization drop the Size 3 printer ribbon and rent out the space the company uses to store the product at $11,000 per year, is there an increase or a decrease in operating income?

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Definitions:

Current Tax Liability

The amount of income taxes a company is obligated to pay within the next year.

Accounting Standards

Authoritative standards and principles that guide financial accounting and reporting practices for businesses and organizations.

Deferred Tax Item

An accounting concept representing a future tax liability or asset, resulting from temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.