he condensed product-line income statement for Dish N’ Dat Company for the month of May is as follows: Dish N’ Dat Company Product-Line Income Statement For the Month Ended May 31 1 Bowls Plates Cups 2 Sales $70,960.00 $105,450.00 $31,760.00 3 Cost of goods sold 32,990.00 42,680.00 16,710.00 4 Gross profit $37,970.00 $62,770.00 $15,050.00 5 Selling and administrative expenses 27,350.00 42,530.00 16,670.00 6 Income from operations $10,620.00 $20,240.00 $(1,620.00) Fixed costs are 30% of the cost of goods sold and 50% of the selling and administrative expenses. Dish N’ Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued. Required: A. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. B. Should the Cups line be retained? Explain. A. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. Differential Analysis Continue Cups (Alternative 1) or Discontinue Cups (Alternative 2) For the Month Ended May 31 1 Continue Cups Discontinue Cups Differential Effect on Income 2 (Alternative 1) (Alternative 2) (Alternative 2) 3 4 5 6 7 8 9 B. Should the Cups line be retained? Explain. No Yes As indicated by the differential analysis in part (A), the income will by if the Cups line is discontinued.

he condensed product-line income statement for Dish N’ Dat Company for the month of May is as follows: Dish N’ Dat Company Product-Line Income Statement For the Month Ended May 31 1 Bowls Plates Cups 2 Sales $70,960.00 $105,450.00 $31,760.00 3 Cost of goods sold 32,990.00 42,680.00 16,710.00 4 Gross profit $37,970.00 $62,770.00 $15,050.00 5 Selling and administrative expenses 27,350.00 42,530.00 16,670.00 6 Income from operations $10,620.00 $20,240.00 $(1,620.00) Fixed costs are 30% of the cost of goods sold and 50% of the selling and administrative expenses. Dish N’ Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued. Required: A. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. B. Should the Cups line be retained? Explain. A. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. Differential Analysis Continue Cups (Alternative 1) or Discontinue Cups (Alternative 2) For the Month Ended May 31 1 Continue Cups Discontinue Cups Differential Effect on Income 2 (Alternative 1) (Alternative 2) (Alternative 2) 3 4 5 6 7 8 9 B. Should the Cups line be retained? Explain. No Yes As indicated by the differential analysis in part (A), the income will by if the Cups line is discontinued.

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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Question

The condensed product-line income statement for Dish N’ Dat Company for the month of May is as follows:

Dish N’ Dat Company

Product-Line Income Statement

For the Month Ended May 31

1		Bowls	Plates	Cups
2	Sales	$70,960.00	$105,450.00	$31,760.00
3	Cost of goods sold	32,990.00	42,680.00	16,710.00
4	Gross profit	$37,970.00	$62,770.00	$15,050.00
5	Selling and administrative expenses	27,350.00	42,530.00	16,670.00
6	Income from operations	$10,620.00	$20,240.00	$(1,620.00)

Fixed costs are 30% of the cost of goods sold and 50% of the selling and administrative expenses. Dish N’ Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued.

	Required:
A.	Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
B.	Should the Cups line be retained? Explain.

A. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

Differential Analysis

Continue Cups (Alternative 1) or Discontinue Cups (Alternative 2)

For the Month Ended May 31

1	Continue Cups	Discontinue Cups	Differential Effect on Income
2	(Alternative 1)	(Alternative 2)	(Alternative 2)
3
4
5
6
7
8
9

B. Should the Cups line be retained? Explain.

Yes

As indicated by the differential analysis in part (A), the income will by

if the Cups line is discontinued.

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