2.00 points The management of Kabanuck Corporation is considering dropping produ

Question

2.00 points The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: $923,000 Sales Varlable expenses Flxed manufacturing expenses Flxed selling and administrative expenses 402,000 $337,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further Investigation has revealed that $204,000 of the fixed manufacturing expenses and $115,000 of the fixed selling and administrative expenses are avoldable If product V41B Is discontinued. According to the company's accounting system, what is the net operating Income earned by product V418? Include all costs In this calculation-whether relevant or not. O $60,000 o $(521,000) O s(60,000) O $521000

Explanation / Answer

Answer

60000

contribution magin = sales - variable expenses

= 923000 - 402000

= 521000

net operating income = contribution margin - fixed manufacturing expenses - fixed selling and administrative expens

= 521000 - 337000 - 244000

= 60000

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