For the Year Ended December 31, 20Y8 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) $(37,180) $(103,780) Fixed costs (32,000) (12,400) (24,800) (69,200) Total cost of goods sold $(80,000) $(31,000) $(61,980) $(172,980) Gross profit $130,000 $124,000 $105,020 $359,020 Operating expenses: Variable expenses $(5,000) $(7,750) $(53,120) $(65,870) Fixed expenses (89,000) (77,000) (106,200) (272,200) Total operating expenses $(94,000) $(84,750) $(159,320) $(338,070) Operating income (loss) $36,000 $39,250 $(54,300) $20,950 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 minu 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) Revenues Costs: Variable Fixed Profit (loss)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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For the Year Ended December 31, 20Y8
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)
$(37,180)
$(103,780)
Fixed costs
(32,000)
(12,400)
(24,800)
(69,200)
Total cost of goods sold
$(80,000)
$(31,000)
$(61,980)
$(172,980)
Gross profit
$130,000
$124,000
$105,020
$359,020
Operating expenses:
Variable expenses
$(5,000)
$(7,750)
$(53,120)
$(65,870)
Fixed expenses
(89,000)
(77,000)
(106,200)
(272,200)
Total operating expenses
$(94,000)
$(84,750)
$(159,320)
$(338,070)
Operating income (loss)
$36,000
$39,250
$(54,300)
$20,950
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)
Revenues
$4
Costs:
Variable
Fixed
Profit (loss)
Transcribed Image Text:For the Year Ended December 31, 20Y8 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) $(37,180) $(103,780) Fixed costs (32,000) (12,400) (24,800) (69,200) Total cost of goods sold $(80,000) $(31,000) $(61,980) $(172,980) Gross profit $130,000 $124,000 $105,020 $359,020 Operating expenses: Variable expenses $(5,000) $(7,750) $(53,120) $(65,870) Fixed expenses (89,000) (77,000) (106,200) (272,200) Total operating expenses $(94,000) $(84,750) $(159,320) $(338,070) Operating income (loss) $36,000 $39,250 $(54,300) $20,950 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) Revenues $4 Costs: Variable Fixed Profit (loss)
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