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Revenues Costs: Variable cost of goods sold Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) March 31 Variable selling and admin. expenses Fixed costs Income (Loss) Continue Cups (Alternative 1) 10000 b. Should the Cups line be retained? Discontinue Cups (Alternative 2) 0000 Differential Effect on Income (Alternative 2) 10000

Revenues Costs: Variable cost of goods sold Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) March 31 Variable selling and admin. expenses Fixed costs Income (Loss) Continue Cups (Alternative 1) 10000 b. Should the Cups line be retained? Discontinue Cups (Alternative 2) 0000 Differential Effect on Income (Alternative 2) 10000

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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Revenues Costs: Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) March 31 Variable cost of goods sold Variable selling and admin. expenses Fixed costs Income (Loss) Continue Cups (Alternative 1) b. Should the Cups line be retained? Discontinue Cups (Alternative 2) Differential Effect on Income (Alternative 2) 0000
Transcribed Image Text:Revenues Costs: Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) March 31 Variable cost of goods sold Variable selling and admin. expenses Fixed costs Income (Loss) Continue Cups (Alternative 1) b. Should the Cups line be retained? Discontinue Cups (Alternative 2) Differential Effect on Income (Alternative 2) 0000
Differential Analysis for a Discontinued Product The condensed product-line income statement for Dish N' Dat Company for the month of March is as follows: Sales Dish N' Dat Company Product-Line Income Statement For the Month Ended March 31 Cost of goods sold Gross profit Selling and administrative expenses Income from operations Bowls $65,200 25,500 $39,700 28,500 $11,200 Plates $88,900 32,400 $56,500 34,500 $22,000 Cups $26,200 14,300 $11,900 15,300 $ (3,400) Fixed costs are 14% of the cost of goods sold and 35% of the selling and administrative expenses. Dish N' Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued. a. Prepare a differential analysis dated March 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate a loss.
Transcribed Image Text:Differential Analysis for a Discontinued Product The condensed product-line income statement for Dish N' Dat Company for the month of March is as follows: Sales Dish N' Dat Company Product-Line Income Statement For the Month Ended March 31 Cost of goods sold Gross profit Selling and administrative expenses Income from operations Bowls $65,200 25,500 $39,700 28,500 $11,200 Plates $88,900 32,400 $56,500 34,500 $22,000 Cups $26,200 14,300 $11,900 15,300 $ (3,400) Fixed costs are 14% of the cost of goods sold and 35% of the selling and administrative expenses. Dish N' Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued. a. Prepare a differential analysis dated March 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate a loss.
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