answer in text form please (without image) Lamothe Kitchen and Bath makes products for the home, which it sells through major retailers and remodelling (do-it-yourself, or DIYoutlets. One product that has had varying success is a ceiling fan for the kitchen. The fan comes in three sizes (36-Inch, 44-Inch, and54-Inch), which are designed for various kitchen sizes and cooling requirements. The chief financial officer (CFO) at Lamothe has beenlooking at the segmented income statement for the fan and is concerned about the results for the 36-inch model.RevenuesVariable costsFixed costs allocated to productsOperating profit (loss)36 Inch$ 393,100242,600158,2305(7,730)RevenueLess variable costsContribution marginLess fixed costsIf the 36-Inch model is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, thecompany's total fixed costs would be reduced by 25 percent.Status Quo44 Inch$ 597,500296,680236,464$ 64,356Required:a. Prepare a differential cost schedule to support your recommendation.b. Should Lamothe Kitchen and Bath should drop the 36-Inch model product line?Complete this question by entering your answers in the tabs below.54 Inch.$375,300174,500149,806$50,994Required A Required BPrepare a differential cost schedule to support your recommendation. (Select option "increase" or "decrease", keeping StatusQuo as the base. Select "none" if there is no effect.)Alternative:Drop36-Inch FanDifference

Differential cost analysis is method the compares the cost and benefit of two or more alternatives…

allocated to products profit (loss) 242,600 158,230 $(7,730) 296,660 236,464 $ 64,356 174,500 149,806 $ 50,994 model is dropped, the revenue associated with it would be lost and the related variable costs sav al fixed costs would be reduced by 25 percent

allocated to products profit (loss) 242,600 158,230 $(7,730) 296,660 236,464 $ 64,356 174,500 149,806 $ 50,994 model is dropped, the revenue associated with it would be lost and the related variable costs sav al fixed costs would be reduced by 25 percent

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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