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Bailey Company manufactures and sells a number of products, tncluding Product R. Results from Last year from the sale of Prduct R are given below: Sales revenue...m. Variable production costs Sates commissions. Satary of product managernaanin Advertising expense Attocated general overhead Net operating Loss R750,000 450,000 110,000 80,000 55,000 Baitey Company is considering eliminat ing the production and sale of Product R. The company has determined that tf Product R is di scontinued, the contribution margin of its other products will increase by 340,000. Based on a cost analysts, the management of Bailey Company has determined that if Product R is discontinued the companys net income wilt decrease by $25,000 Calculate the amount of allocated general overhead cost for Product R incurred Last year
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Sales re venue 7So,000 A vo ida ble cost voonia ble production Cost s Sales Commissions 1 000O Fied product le adventisirq Totalavoidable expenses O000 40000-25000 I SooO contyibution m s 4000 and net inco decreases b Tota avoida ble expense.s 35, coo Salory aP poduct a rogeSales ve vene Avo ida ble cost vaniable pro duction Css Sales Co mm sstons TSo ,000 4 soo0o Sahy op product noogrn Sooo Fixed pyoduct line advetisiq o0oo Tolal avoidable expenses 73sooo So0O Allo coted 9 wet opea trg les s Allocated genc>al ovenhead 60 OS S ans

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