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For the past year, WoolCorp has experimented with its third product, extra-thick rug yarn. The company wishes to consider whether to continue or discontinue manufacturing and selling this product. You decide to prepare a differential and the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete the differential analysis. Sales Costs of goods sold: Variable costs Fixed costs Total cost of goods sold Gross profit Operating expenses: Variable expenses Fixed expenses Total operating expenses Revenues Costs: Variable Fixed Profit (loss) 000 90.260 ✔ -130,980 X WoolCorp Condensed Income Statement For the Year Ended December 31, 20Y8 Wool Yarn Raw Wool $210,000 $155,000 -24.240 X $(48,000) (32,000) $(80,000) $130,000 $(5,000) (89,000) $(94,000) $36,000 $(18,600) (12,400) $(31,000) $124,000 $(7,750) (77,500) $(85,250) $38,750 Operating income (loss) 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. Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 20Y8 Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative 2) Differential Effects (Alternative 2) 197,000 ✓ -197,000 ✓ 000 -130,980 X Rug Yarn $197,000 -130.980 X $(37,150) (24,790) $(61,940) $135,060 $(53,110) (106,200) $(159,310) $(24,250) Total Company $562,000 $(103,750) (69,190) $(172,940) $389,060 $(65,860) (272,700) $(338,560) $50,500 BOO 90.260 -106.740 ✔

For the past year, WoolCorp has experimented with its third product, extra-thick rug yarn. The company wishes to consider whether to continue or discontinue manufacturing and selling this product. You decide to prepare a differential and the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete the differential analysis. Sales Costs of goods sold: Variable costs Fixed costs Total cost of goods sold Gross profit Operating expenses: Variable expenses Fixed expenses Total operating expenses Revenues Costs: Variable Fixed Profit (loss) 000 90.260 ✔ -130,980 X WoolCorp Condensed Income Statement For the Year Ended December 31, 20Y8 Wool Yarn Raw Wool $210,000 $155,000 -24.240 X $(48,000) (32,000) $(80,000) $130,000 $(5,000) (89,000) $(94,000) $36,000 $(18,600) (12,400) $(31,000) $124,000 $(7,750) (77,500) $(85,250) $38,750 Operating income (loss) 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. Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 20Y8 Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative 2) Differential Effects (Alternative 2) 197,000 ✓ -197,000 ✓ 000 -130,980 X Rug Yarn $197,000 -130.980 X $(37,150) (24,790) $(61,940) $135,060 $(53,110) (106,200) $(159,310) $(24,250) Total Company $562,000 $(103,750) (69,190) $(172,940) $389,060 $(65,860) (272,700) $(338,560) $50,500 BOO 90.260 -106.740 ✔

FINANCIAL ACCOUNTING
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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Continue/Discontinue For the past year, WoolCorp has experimented with its third product, extra-thick rug yarn. The company wishes to consider whether to continue or discontinue manufacturing and selling this product. You decide to prepare a differential analysis of the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete the differential analysis. Sales Costs of goods sold: Variable costs Fixed costs Total cost of goods sold Gross profit Operating expenses: Variable expenses Fixed expenses Total operating expenses Operating income (loss) Revenues Costs: Variable Fixed Profit (loss) $ 197,000 90,260 -130,980 X WoolCorp Condensed Income Statement For the Year Ended December 31, 20Y8 Raw Wool $210,000 Wool Yarn $155,000 -24,240 X $(48,000) (32,000) $(80,000) $130,000 $(5,000) (89,000) $(94,000) $36,000 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. Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 20Y8 Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative 2) Differential Effects (Alternative 2) 0 ✓ -197,000 ✓ $(18,600) (12,400) $(31,000) $124,000 $(7,750) (77,500) $(85,250) $38,750 0 -130,980 X Rug Yarn $197,000 -130,980 X $(37,150) (24,790) $(61,940) $135,060 $(53,110) (106,200) $(159,310) $(24,250) Total Company $562,000 $(103,750) (69,190) $(172,940) $389,060 $(65,860) (272,700) $(338,560) $50,500 90,260 0 -106,740 ✓
Transcribed Image Text:Continue/Discontinue For the past year, WoolCorp has experimented with its third product, extra-thick rug yarn. The company wishes to consider whether to continue or discontinue manufacturing and selling this product. You decide to prepare a differential analysis of the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete the differential analysis. Sales Costs of goods sold: Variable costs Fixed costs Total cost of goods sold Gross profit Operating expenses: Variable expenses Fixed expenses Total operating expenses Operating income (loss) Revenues Costs: Variable Fixed Profit (loss) $ 197,000 90,260 -130,980 X WoolCorp Condensed Income Statement For the Year Ended December 31, 20Y8 Raw Wool $210,000 Wool Yarn $155,000 -24,240 X $(48,000) (32,000) $(80,000) $130,000 $(5,000) (89,000) $(94,000) $36,000 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. Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 20Y8 Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative 2) Differential Effects (Alternative 2) 0 ✓ -197,000 ✓ $(18,600) (12,400) $(31,000) $124,000 $(7,750) (77,500) $(85,250) $38,750 0 -130,980 X Rug Yarn $197,000 -130,980 X $(37,150) (24,790) $(61,940) $135,060 $(53,110) (106,200) $(159,310) $(24,250) Total Company $562,000 $(103,750) (69,190) $(172,940) $389,060 $(65,860) (272,700) $(338,560) $50,500 90,260 0 -106,740 ✓
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