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Suire Corporation is considering dropping product D14E. 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 $195 , 000 of the fixed
manufacturing expenses and $110 , 000 of the fixed selling and administrative expenses are
avoidable if product D14E is discontinued. Required: a. According to the company's accounting
system, what is the net operating income earned by product D14E? (Net losses should indicated
by a minus sign.) b. What would be the financial advantage (disadvantage) of dropping product
D14E? Should the product be dropped?

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  • 1. Suire Corporation is considering dropping product D14E. 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 $195 , 000 of the fixed manufacturing expenses and $110 , 000 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product D14E? (Net losses should indicated by a minus sign.) b. What would be the financial advantage (disadvantage) of dropping product D14E? Should the product be dropped?