Answer:
Overall net operating income would decrease by $135,000
Explanation:
Calculation for What would be the effect on the company's overall net operating income if product J14V were dropped
Keep J14V Drop J14VDifference
Sales$980,000 $ 0 $(980,000)
Variable expenses
$394,000 $0 $394,000
Contribution margin
$586,000 $0 $(586,000)
Fixed expenses:
Fixed manufacturingexpenses
$376,000 $131,000 $245,000
($376,000-$245,000=$131,000)
Fixed selling and administrative expenses
$256,000 $50,000 $206,000
($256,000-$206,000=$50,000)
Net operating income(loss)
$(46,000) $(181,000) $(135,000)
Net operating income would decline by $135,000
Therefore the Overall net operating income would decrease by $135,000.
