The Management of Kabanuck Corporation Is Considering Dropping Product V41B

Multiple Choice

The management of Kabanuck Corporation is considering dropping product V41B.Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system.Further investigation has revealed that $184, 000 of the fixed manufacturing expenses and $200, 000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued. What would be the effect on the company's overall net operating income if product V41B were dropped?

A) Overall net operating income would increase by $71, 000.
B) Overall net operating income would increase by $132, 000.
C) Overall net operating income would decrease by $132, 000.
D) Overall net operating income would decrease by $71, 000.