(Solved):The management of Bamby Corporation is considering dropping product Y25C. Data from the company’s…

 

Question

The management of Bamby Corporation is considering dropping product Y25C. Data from the company’s accounting system appear below:

Sales $610,000

Variable expenses $244,000

Fixed manufacturing expenses $226,000

Fixed selling and administrative expenses $171,000

All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $117,000 of the fixed manufacturing expenses and $78,000 of the fixed selling and administrative expenses are avoidable if product Y25C is

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