Sales Cost of goods sold Gross profit Operating expenses Loss from operations, $12,750,000 8,500,000 $4,250,000 6,000,000 (1,750,000) It is estimated that 25% of the cost of goods sold.represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Fruit Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate a loss
Sales Cost of goods sold Gross profit Operating expenses Loss from operations, $12,750,000 8,500,000 $4,250,000 6,000,000 (1,750,000) It is estimated that 25% of the cost of goods sold.represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Fruit Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate a loss
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Jm. 155.
Transcribed Image Text:Sales
Cost of goods sold
Gross profit
Operating expenses
Loss from operations,
(1,750,000)
It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Fruit Cola is only
one of many products, the fixed costs will not be materially affected if the product is discontinued.
$12,750,000
8,500,000
$4,250,000
6,000,000
a. Prepare a differential analysis dated January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is
zero, enter "0". Use a minus sign to indicate a loss
Revenues
Costs:
Variable cost of goods sold
Variable operating expenses
Fixed costs
Income (Loss)
Differential Analysis
Continue Fruit Cola (Alt. 1) or Discontinue Fruit Cola (Alt. 2)
January 5
Continue Fruit Cola (Alternative 1) Discontinue Fruit Cola (Alternative 2) Differential Effect on Income (Alternative 2)
12.110,000
-12,750,000
6315,000 V
1,100,000
11,475,000 X
-1.750.000
OV
14,500,000 X
3,005.000✔
6.375.000
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