Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net loss for Product J of $12,250. This net loss resulted from sales of $260,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year. Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued. Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J. If an amount box does not require an entry, leave it blank or enter "0". Differential Analysis Proposal to Discontinue Product J February 8 Continue Product J Discontinue Product J Differential Effect on Income $fill in the blank 2 $fill in the blank 3 $fill in the blank 4 Costs: $fill in the blank 6 $fill in the blank 7 $fill in the blank 8 fill in the blank 10 fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 fill in the blank 16 fill in the blank 18 fill in the blank 19 fill in the blank 20 Total costs $fill in the blank 21 $fill in the blank 22 $fill in the blank 23 Income (loss) $fill in the blank 24 $fill in the blank 25 $fill in the blank 26

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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Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net loss for Product J of $12,250. This net loss resulted from sales of $260,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year. Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued.

Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J. If an amount box does not require an entry, leave it blank or enter "0".

Differential Analysis
Proposal to Discontinue Product J
February 8
	Continue Product J	Discontinue Product J	Differential Effect on Income
	$fill in the blank 2	$fill in the blank 3	$fill in the blank 4
Costs:
	$fill in the blank 6	$fill in the blank 7	$fill in the blank 8
	fill in the blank 10	fill in the blank 11	fill in the blank 12
	fill in the blank 14	fill in the blank 15	fill in the blank 16
	fill in the blank 18	fill in the blank 19	fill in the blank 20
Total costs	$fill in the blank 21	$fill in the blank 22	$fill in the blank 23
Income (loss)	$fill in the blank 24	$fill in the blank 25	$fill in the blank 26

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