Question - Tim Corporation is considering dropping product XYZ. Data from the company's accounting system appear below.
Sales $300,000
Variable expenses 160,000
Fixed manufacturing overhead 100,000
Fixed selling and administrative expenses 80,000
20% of the fixed manufacturing overhead and 10% of the fixed selling and administrative expenses may be avoided if product XYZ is dropped. What would be the impact on net operating income if the product line was dropped? Please show your work.