The Management of Drummer Corporation Is Considering Dropping Product D84L

question 14

Essay

The management of Drummer Corporation is considering dropping product D84L. 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 $201,000 of the fixed manufacturing expenses and $156,000 of the fixed selling and administrative expenses are avoidable if product D84L is discontinued.
Required:
What would be the effect on the company's overall net operating income if product D84L were dropped? Should the product be dropped? Show your work!

Recognize the role of social and personal factors in the effectiveness of social control mechanisms.

Explore the effects of societal reaction (labeling) on individuals’ identities and behaviors.

Understand the complexities involved in the reactions to norm or rule violations and their consequences.

Understand the concept and implications of the deterrence hypothesis in social control.

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Definitions:

Sale of Goods

A transaction between a buyer and a seller in which the seller transfers ownership of goods to the buyer for a price.

Contracts for Services

Agreements between parties where one agrees to provide a service to the other in exchange for compensation.

Sale of Land

The legal process involving the transfer of property rights in land from one party to another, typically through a deed.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, facilitating the uniformity and predictability of commercial activities across different states.