The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales$840,700?Variable expenses$436,800???Fixed manufacturing expenses$285,600?Fixed selling and administrative expenses$243,800???All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $202,000 of the fixed manufacturing expenses and $175,100 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued.Required:What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped?Net operating income would ________ by ________ if product B90D were dropped. Therefore, the product ________
dropped.
What will be an ideal response?
Net operating income would decline by $(26,800) if product B90D were dropped. Therefore, the product should not be dropped.
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What will be an ideal response?
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