$ 119,000 Fixed Selling and Administrative Expenses $ 94,000
All fixed expenses of the company are fully allocated to products in the company ' s accounting system. Further investigation has revealed that $ 55,000 of the fixed manufacturing expenses and $ 71,000 of the fixed selling and administrative expenses are avoidable if product S85U is discontinued.
Required:
i. According to the company ' s accounting system, what is the net operating income earned by product S85U? Show your work!
ii. What would be the effect on the company ' s overall net operating income of dropping product S85U? Should the product be dropped? Show your work! 4. Question:( TCO D) Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows. Direct Materials $ 15.70 Direct Labor $ 17.50 Variable Manufacturing Overhead $ 4.50 Fixed Manufacturing Overhead $ 14.60 Unit Product Cost $ 52.30
An outside supplier has offered to sell the company all of these parts it needs for $ 51.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more