Tjelmeland Corporation Is Considering Dropping Product S85U

question 77

Essay

Tjelmeland Corporation is considering dropping product S85U. 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 $55,000 of the fixed manufacturing expenses and $71,000 of the fixed selling and administrative expenses are avoidable if product S85U is discontinued.
Required:
a. According to the company's accounting system, what is the net operating income earned by product S85U? Show your work!
b. What would be the effect on the company's overall net operating income of dropping product S85U? Should the product be dropped? Show your work!

Acknowledge the impact of culture and societal values on psychology.

Recognize the ethical considerations in psychological research and practice.

Understand the significance of human behavior and mental processes in different contexts.

Identify the principles of humanistic psychology and its focus on personal fulfillment.

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Definitions:

Inferior Good

A category of products whose demand diminishes when consumer income rises, in opposition to normal goods.

Wage Rate

The fixed amount of compensation or payment provided to an employee by an employer in return for work performed, typically expressed per hour or year.

Utility Maximizer

An individual or entity that seeks to achieve the highest level of satisfaction possible from their consumption choices, given their resources.

Net Seller

An individual or entity that sells more than it purchases in a given market, often resulting in a net inflow of funds.