(Solution Document) The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below:


The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below:

 

  Sales $920,000 Variable expenses $399,000 Fixed manufacturing expenses $334,000 Fixed selling and administrative expenses $241,000  

 

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $201,000 of the fixed manufacturing expenses and $112,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued.

 

According to the company's accounting system, what is the net operating income earned by product V41B?

$521,000

$(54,000)

$(521,000)

$54,000

 







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