Explain whether the company should continue or discontinue the Product T.

Question

Discontinue a Segment Product X has revenue of $94,800, variable cost of goods sold of $61,200, variable selling expenses of $39,700, and fixed costs of $36,000, creating a loss from operations of $42,100. Prepare a differential analysis as of May 9 to determine whether to Continue Product X (Alternative 1) or Discontinue Product X (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue Product X (Alt. 1) or Discontinue Product X (Alt. 2) May 9 Continue Discontinue Differential Product X Product X Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenue Costs: Variable cost of goods sold Variable selling expenses Fixed costs Profit (loss) Determine if Product X should be continued (Alternative 1) or discontinued (Alternative 2).

Answer 1

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Chapter 11, Problem 2BE

To determine

Explain whether the company should continue or discontinue the Product T.

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