The management of Austin Corporation is considering dropping product R97C

Business Aug 04, 2020

The management of Austin Corporation is considering dropping product R97C. Data from the company's accounting system appear below:
Saks 3130.000 Variable expenses $56000 Fixed manufacturing expenses 549.000 Fixed selling and administrative expenses 535.000
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that 534.000 of the fixed manufacturing expenses and 520.000 of the fixed selling and administrative expenses are avoidable if product R97C is discontinued. What would be the effect on the company's overall net operating income if product R97C were dropped?

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