Costabile Corporation Is Considering Dropping Product G41O

question 66

Essay

Costabile Corporation is considering dropping product G41O.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 $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G41O is discontinued.
Required:
a.According to the company's accounting system,what is the net operating income earned by product G41O? Show your work!
b.What would be the effect on the company's overall net operating income of dropping product G41O? Should the product be dropped? Show your work!

---

Definitions:

Historical

Pertaining to the study, analysis, or representation of past events.

Exercise Power

The act of utilizing authority or influence to affect outcomes or behaviors in others.

Party

A social gathering of invited guests, typically involving eating, drinking, entertainment, and sometimes specific celebrations.

Proletariat

The class of workers in capitalist societies who do not own the means of production and whose main source of income is the sale of their labor power.