**Lamothe Kitchen and Bath Financial Analysis**Lamothe Kitchen and Bath manufactures products for home improvement, sold through major retailers and DIY outlets. One notable product is a ceiling fan designed for various kitchen sizes, offered in three sizes: 36-inch, 44-inch, and 54-inch. The Chief Financial Officer (CFO) is reviewing the performance of the 36-inch fan model to address concerns about its profitability.**Segmented Income Statement:** | | 36 Inch | 44 Inch | 54 Inch ||----------------------|----------|----------|----------|| Revenues | $360,800 | $561,800 | $339,600 || Variable costs | $225,600 | $279,600 | $157,800 || Fixed costs allocated to products | $141,230 | $219,464 | $132,806 || Operating profit (loss) | $(6,030) | $62,656 | $49,294 |If the 36-inch model is discontinued, the revenue generated by it will be lost, and the associated variable costs will be saved. Additionally, the company’s total fixed costs would decrease by 25 percent.**Requirements:**a. Prepare a differential cost schedule to support your recommendation.b. Consider whether Lamothe Kitchen and Bath should discontinue the 36-inch model.**Instructions:**1. Complete the differential cost schedule to evaluate the impact of discontinuation.2. Decide on a course of action: Should Lamothe Kitchen and Bath drop the 36-inch fan?**Response Section:**Input your analysis using the provided tabs to compare the status quo with the alternative scenario of dropping the 36-inch model.This exercise involves figuring out potential savings and losses, guiding Lamothe Kitchen and Bath in optimizing their product line profitability.

Revenues Variable costs Fixed costs allocated to products Operating profit (loss) 36 Inch $360,800 225,600 141, 230 $ (6,030) 44 Inch $ 561,800 279,680 219,464 $ 62,656 54 Inch $ 339,600 157,500 132,806 $ 49,294

Revenues Variable costs Fixed costs allocated to products Operating profit (loss) 36 Inch $360,800 225,600 141, 230 $ (6,030) 44 Inch $ 561,800 279,680 219,464 $ 62,656 54 Inch $ 339,600 157,500 132,806 $ 49,294

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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