15 Jul ACCORDING TO THE COMPANY’S ACCOUNTING SYSTEM, WHAT IS THE NET OPERATING INCOME EARNED BYPRODUCT S85U?
(TCO D) Tjelmeland Corporation is considering dropping productS85U. Data from the company’s accounting system appear below: Allfixed expenses of the company are fully allocated to products inthe company’s accounting system. Further investigation has revealedthat $55,000 of the fixed manufacturing expenses and $71,000 of thefixed selling and administrative expenses are avoidable if productS85U is discontinued.Required:i. According to the company’s accounting system, what is the net operating income earned byproduct S85U? Show your work!ii. What would be the effect on thecompany’s overall net operating income of dropping product S85U?Should the product be dropped?
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