What would be the financial advantage (disadvantage) from dropping product D74F?

A) $226,000
B) $58,000
C) ($226,000)
D) ($58,000)

The financial advantage of dropping product D74F is the elimination of its negative contribution margin of -$226,000. This means that the product is actually losing money for the company. Therefore, dropping it would save the company $226,000. The financial disadvantage would be the loss of the product's positive contribution margin of $58,000, but since this is outweighed by the negative contribution margin, the overall financial impact would be a positive $226,000.

The company would forego the profit of $226,000 if this product were dropped.
Reference: CH11-Ref5
Key Corporation is considering the addition of a new product.The expected cost and revenue data for the new product are as follows: If the new product is added, the combined contribution margin of the other, existing products is expected to drop $65,000 per year.Total common fixed corporate costs would be unaffected by the decision of whether to add the new product.