Complete the following table using the data in the preceding income statement to compare the effects of dropping the rug yarn line of products. If required, use a minus sign to indicate a loss.
Hello! Please help me to answer the table and final questions at the end in bold. Thank you!! :)
| Condensed Income Statement For the Year Ended December 31, 20Y8 |
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| Raw Wool | Wool Yarn | Rug Yarn | Total Company | |||||||
| Sales | $210,000 | $155,000 | $167,000 | $532,000 | ||||||
| Costs of goods sold: | ||||||||||
| Variable costs | $(48,000) | $(18,600) | $(37,190) | $(103,790) | ||||||
| Fixed costs | (32,000) | (12,400) | (24,780) | (69,180) | ||||||
| Total cost of goods sold | $(80,000) | $(31,000) | $(61,970) | $(172,970) | ||||||
| Gross profit | $130,000 | $124,000 | $105,030 | $359,030 | ||||||
| Operating expenses: | ||||||||||
| Variable expenses | $(5,000) | $(7,750) | $(53,080) | $(65,830) | ||||||
| Fixed expenses | (89,000) | (77,000) | (106,200) | (272,200) | ||||||
| Total operating expenses | $(94,000) | $(84,750) | $(159,280) | $(338,030) | ||||||
| Operating income (loss) | $36,000 | $39,250 | $(54,250) | $21,000 |
Complete the following table using the data in the preceding income statement to compare the effects of dropping the rug yarn line of products. If required, use a minus sign to indicate a loss.
| Continue Rug Yarn (Alternative 1) | Discontinue Rug Yarn (Alternative 2) | Differential Effects (Alternative 2) | |
| Revenues | |||
| Costs: | |||
| Variable | |||
| Fixed | |||
Question Content Area
Final Questions
Answer the following question (1), then fill in table (2).
1. After reviewing your work on the Continue/Discontinue panel, should WoolCorp continue (Alternative 1) or discontinue (Alternative 2) the rug yarn product line?
2. The following table shows several business decisions that might need to be made across the top row. Along the left-hand column, there are important factors to consider.
Select the factor(s) that are important to the decision. Select all that apply. If the factor is not important to any of the decisions, select "yes" on the "Not Important" dropdown, otherwise select "no".
| Lease or Sell |
Sell or Process Further |
Special Price Order |
Make or Buy | Continue or Discontinue |
Production Bottleneck | Not Important |
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| Impact on regular prices |
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| Contribution margin per bottleneck hour |
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| Differential revenue is more than differential cost |
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| Supplier price is less than WoolCorp’s variable cost per unit |
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| Sunk costs |
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| Robinson-Patman Act |
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