The management of Furrow Corporation is considering dropping product LO7E. Data from the...

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Accounting

The management of Furrow Corporation is considering dropping product LO7E. Data from the company's budget for the upcoming year appear below:
Sales
Variable expenses
Fixed manufacturing expenses
Fixed selling and administrative expenses
$920,000
$386,000
$368,000
$248,000
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $229,000 of the fixed manufacturing expenses and $190,000 of the fixed selling and administrative expenses are avoidable if product LO7E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:
Multiple Choice
$(82,000)
$115,000
$82,000
$(115,000)
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