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    Company's overall net operating income

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    (TCO D) The management of Drummer Corporation is considering dropping product D84L. Data from the company's accounting system appear below.

    Sales $800,000
    Variable Expenses $440,000
    Fixed Manufacturing Expenses $248,000
    Fixed Selling and Administrative Expenses $184,000

    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 $156,000 of the fixed selling and administrative expenses are avoidable if product D84L is discontinued.

    Required:

    What would be the effect on the company's overall net operating income if product D84L were dropped? Should the product be dropped? Show your work!

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    https://brainmass.com/business/accounting/company-s-overall-net-operating-income-496909

    Solution Preview

    (TCO D) The management of Drummer Corporation is considering dropping product D84L. Data from the company's accounting system appear below.

    Sales $800,000
    Variable Expenses $440,000
    Fixed Manufacturing Expenses $248,000
    Fixed Selling and ...

    Solution Summary

    Solution discusses the effect on the company's overall net operating income if product D84L were dropped.

    $2.19

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