The Management of Bercegeay Corporation Is Considering Dropping Product Y25C

question 117

Essay

The management of Bercegeay Corporation is considering dropping product Y25C. 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 $78,000 of the fixed selling and administrative expenses are avoidable if product Y25C is discontinued.
Required:
a. What is the net operating income earned by product Y25C 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 Y25C? Should the product be dropped? Show your work!

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Definitions:

Maturation

The process of becoming mature or fully developed, either in a biological context or referring to the development of concepts and skills.

Dry Skin

A condition characterized by a lack of adequate moisture in the outer layer of the skin, leading to roughness, flaking, itching, and sometimes cracking.

Fat-Free Soap

A type of soap that contains no fats or oils, often used for specific dermatological conditions or preferences.

Blood Flow

The movement of blood through the circulatory system, delivering nutrients and oxygen to cells and removing waste products.