The management of Thews Corporation is considering dropping product E28I. Data from the company’s accounting system appear below.
Sales $480,000
Variable Expenses $202,000
Fixed Manufacturing Expenses $158,000
Fixed Selling and Administrative Expenses $130,000
All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $86,000 of the fixed manufacturing expenses and $67,000 of the fixed selling and administrative expenses are avoidable if product E28I is discontinued.
Required:
i. What is the net operating income earned by product E28I according to the company’s accounting system? Show your work!
ii. What would be the effect
