Chapter 24, Problem 24.2APE

Discontinue a segment

Product TS-20 has revenue of $102,000, variable cost of goods sold of $52,500, variable selling expenses of $21,500, and fixed Costs of $35,000, creating a loss from operations of $7,000. Prepare a differential analysis as of September 12 to determine if Product TS-20 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision.