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State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over...

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Accounting

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State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past quarter. The past three months of information for Model A02777 are summarized below: Sales (1,000 units) Manufacturing costs $390,000 Direct materials 190,000 100,000 120,000 ($20,000) Direct labor ($15 per hour) Overhead Operating loss Overhead costs are 60% variable and he remaining 40 IS depreciation of special equipment or mo e A If Model A02777 is dropped from the product line, operating income will O A. decrease by $20,000 OB. increase by $48,000 OC. increase by $20,000 O D. decrease by $28,000 777 hat as n res ae va

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