accounting-drop or retain
the management of scholer corporation is considering dropping product MC. Data from the company's accounting system appear below:
sales... 550,000
variable expenses... 242,000
fixed manufacturing expenses... 215,000
fixed selling and administrative expenses.. 132,000
all fixed expanses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that 137,000 of the fixed manufacturing expenses and 79,000 of the fixed selling and admin. Expenses are avoidable if product mc is discontinued.
a. what is the net operating income earned by product MC according to the company's accounting system? Prepare a comtribution margin income statement to support your answer.
b. what would be the effect on the company's overall net operating income of dropping product MC? Should the product be dropped? Show work to prove why or why not.
I have no idea how to do this can anyone take me step by step on what to calculate and what to do?
thanks!!