The Management of Rodarmel Corporation Is Considering Dropping Product G91Q

question 14

Essay

The management of Rodarmel Corporation is considering dropping product G91Q. 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 $57,000 of the fixed manufacturing expenses and $40,000 of the fixed selling and administrative expenses are avoidable if product G91Q is discontinued.
Required:
a. What is the net operating income earned by product G91Q according to the company's accounting system? Show your work!
b. What would be the effect on the company's overall net operating income of dropping product G91Q? Should the product be dropped? Show your work!

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Definitions:

Systematic Research Anchor

A principle or approach in management research that emphasizes rigor, scientific methods, and empirical evidence.

Qualitative Data

Non-numeric information that is used to describe attributes, properties, or characteristics of objects or events.

Workforce Diversity

The inclusion of a wide range of differences among employees in an organization, including race, gender, age, and cultural background.

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives.