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In-s [12.5K]
3 years ago
14

The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year

appear below: Sales $ 920,000 Variable expenses $ 386,000 Fixed manufacturing expenses $ 368,000 Fixed selling and administrative expenses $ 248,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $229,000 of the fixed manufacturing expenses and $190,000 of the fixed selling and administrative expenses are avoidable if product L07E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be
Business
1 answer:
zzz [600]3 years ago
3 0

Answer:

The financial disadvantage is    -$ 197,000

Explanation:

Sales $ 920,000

Variable expenses $ 386,000

Fixed manufacturing expenses $ 368,000

Fixed selling and administrative expenses $ 248,000

wtih  Product L07E is eliminated

Unfavorable Fixed Manufacturing Expense = 368,000 - 229,000

= $139000

Unfavorable Fixed Selling and Administrative Expense = 248,000 - 190,000

=$58000

so the final disadvantage of eliminating product L07E = -139000-58000

-$ 197,000

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Jill took ​$50 comma 000 that she had in savings and started her own business. If left in investments she would have earned ​$5
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$140,000 and $195,000

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