The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 830,000 Variable expenses $ 390,000 Fixed manufacturing expenses $ 266,000 Fixed selling and administrative expenses $ 232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D74F?

the financial disadvantage of dropping D74F = $226,000. This means that if the company drops D74F, its operating income will decrease by $226,000.

Explanation:

income from product D74F = $830,000 - $390,000 - $266,000 - $232,000 = -$58,000

unavoidable costs = ($266,000 - $111,000) + ($232,000 - $103,000) = $284,000

the financial disadvantage of dropping D74F = total unavoidable costs - net loss = $284,00 - $58,000 = $226,000.

it established new limitations on use and disclosure for marketing purposes, prohibited selling medical information, expanded individuals’ rights to accessing their own information, and to obtain restrictions from certain disclosures of protected heath information to health plans.