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Nutall Corporation is considering dropping product N28X




Question;1.;Nutall;Corporation is considering dropping product N28X. 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 $199,000;of the fixed manufacturing expenses and $114,000 of the fixed selling and;administrative expenses are avoidable if product N28X is discontinued.Required;a. According to the company's accounting system, what is the net operating;income earned by product N28X? Show your work!b. What would be the effect on the company's overall net operating;income of dropping product N28X? Should the product be dropped? Show your;work!2. Mr. Earl Pearl, accountant for Margie Knall Co.;Inc., has prepared the following product-line income data;The following additional information is available;* The factory rent of $1,500 assigned to Product C is avoidable if the product;were dropped.;* The company's total depreciation would not be affected by dropping C.;* Eliminating Product C will reduce the monthly utility bill from $1,500 to;$800.;* All supervisors' salaries are avoidable.;* If Product C is discontinued, the maintenance department will be able to;reduce monthly expenses from $3,000 to $2,000.;* Elimination of Product C will make it possible to cut two persons from the;administrative staff, their combined salaries total $3,000.Required;Prepare an analysis showing whether Product C should be eliminated.


Paper#42931 | Written in 18-Jul-2015

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