Balser Corporation manufactures and sells a number of products, including a prod

Question

Balser Corporation manufactures and sells a number of products, including a product called JYMP. Results for last year for the manufacture and sale of JYMPs are as follows $ 960,000 Sales Less expenses: $464,000 Variable production costs Sales commissions Salary of product manager Fixed product advertising Fixed manufacturing overhead 144,000 100,000 160,000 132,000 1,000,000 Net operating loss $ (40,000) Balser is trying to decide whether to discontinue the manufacture and sale of JYMPs. All expenses other than fixed manufacturing overhead are avoidable if the product is dropped. None of the fixed manufacturing overhead is avoidable Assume that dropping Product JYMP will have no effect on other products The annual financial advantage (disadvantage) for the company of eliminating this product should be

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Sales        960,000.00 Less Variable production costs      (464,000.00) Less Sales commission      (144,000.00) Less salary of product manager      (100,000.00) Less fixed product advertising      (160,000.00) Income from JYMP           92,000.00 Thus company should continue to manufacture JYMP The financial disadvantage for eliminating this product is 92,000 Note Fixed manufacturing overhead are irrelevant costs as they will be incurred whether company manufactures or not manufactures JYMP

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