The Management of Dorl Corporation Has Been Concerned for Some

question 11

Multiple Choice

The management of Dorl Corporation has been concerned for some time with the financial performance of its product I54J and has considered discontinuing it on several occasions. Data from the company's accounting system appear below: In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $95,000 of the fixed manufacturing expenses and $85,000 of the fixed selling and administrative expenses are avoidable if product I54J is discontinued.
-According to the company's accounting system, what is the net operating income earned by product I54J?

• A) $14,000
• B) ($357,000)
• C) ($14,000)
• D) $357,000

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Definitions:

Appreciated

An increase in the value of an asset over time.

Domestic Investment

The total spending on capital within a country, including investments in machinery, infrastructure, and technology, by the private and public sectors.

Foreign Assets

Financial assets held in a country other than where the investor is based, including stocks, bonds, and real estate.

Country's Saving

The portion of a country's income that is not consumed by individuals or government spending, but instead is set aside for future investment or expenditures.