Nutall Corporation is considering dropping product N28X. Data from the company's accounting system appear below:
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| Sales |
$ |
730,000 |
| Variable expense |
$ |
336,000 |
| Fixed manufacturing expenses |
$ |
256,000 |
| Fixed selling and administrative expense |
$ |
204,000 |
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All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $199,000 of the fixed manufacturing expenses and $114,000 of the fixed selling and administrative expenses are avoidable if product N28X is discontinued.
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| 1. |
What would be the effect on the company's overall net operating income of dropping product N28X? (Input the amount as a positive value. Omit the "$" sign in your response.)
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| Net operating income would be (Click to select)increasedecrease by $ . |
| 2. |
Should the product be dropped?
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