Differential Analysis Report for a Discontinued ProductA condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year:Sales$234,000Cost of goods sold(109,000)Gross profit$125,000Operating expenses(145,000)Operating loss$(20,000)It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since RCis only one of many products, the fixed costs will not be significantly affected if the product is discontinued.a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola.British Beverage Inc.Proposal to Discontinue Royal ColaDifferential Analysis ReportDifferential revenue from annual sales of Royal Cola:Revenue from sales vDifferential cost of annual sales of Royal Cola:Variable cost of goods sold vSign out perating loss$(20,000)is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Ros only one of many products, the fixed costs will not be significantly affected if the product is discontinued.a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola.British Beverage Inc.Proposal to Discontinue Royal ColaDifferential Analysis ReportDifferential revenue from annual sales of Royal Cola:Revenue from sales vDifferential cost of annual sales of Royal Cola:Variable cost of goods sold vVariable operating expenses vAnnual differential income from sales of Royal Cola vFeedbackCheck My Worka. Follow Exhibit 5 and Exhibit 6 in the text, For continued use, subtract the variable and fixed costs from revenues, For discontinued use, only thefixed costs remain. Determine the differential effect on revenues, costs, and income (loss).Sign out

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Description: Differential Analysis Report for a Discontinued ProductA condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year:Sales$234,000Cost of goods sold(109,000)Gross profit$125,000Operat

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Differential Analysis Report for a Discontinued Product A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year: Sales $234,000 Cost of goods sold (109,000) Gross profit $125,000 Operating expenses (145,000) Operating loss $(20,000) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since R is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola.

Differential Analysis Report for a Discontinued Product A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year: Sales $234,000 Cost of goods sold (109,000) Gross profit $125,000 Operating expenses (145,000) Operating loss $(20,000) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since R is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola.

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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