roduct A has revenue of $195,000, variable cost of goods sold of $115,700, variable selling expenses of $33,500, and fixed costs of $60,900, creating a loss from operations of $15,100.
Prepare a differential analysis as of May 9, to determine whether Product A should be continued (Alternative 1) or discontinued (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 A (Alt. 1) or Discontinue Product A (Alt. 2)  
May 9  
Continue Product A (Alternative 1) 
Discontinue Product A (Alternative 2) 
Differential Effect on Income (Alternative 2) 

Revenues  $  $  $ 
Costs:  
Variable cost of goods sold  
Variable selling expenses  
Fixed costs  
Income (Loss)  $  $  $ 
Determine if Product A should be continued (Alternative 1) or
discontinued (Alternative 2).

Make or Buy
A restaurant bakes its own bread for a cost of $168 per unit (100 loaves), including fixed costs of $36 per unit. A proposal is offered to purchase bread from an outside source for $97 per unit, plus $8 per unit for delivery.
Prepare a differential analysis dated July 7 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread, assuming that 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  
Make Bread (Alt. 1) or Buy Bread (Alt. 2)  
July 7  
Make Bread (Alternative 1) 
Buy Bread (Alternative 2) 
Differential Effect on Income (Alternative 2) 

Sales price  $0  $0  $0 
Unit Costs:  
Purchase price  $  $  $ 
Delivery  
Variable costs  
Fixed factory overhead  
Income (Loss)  $  $  $ 
Determine whether the company should make (Alternative 1) or buy
(Alternative 2) the bread.

Replace Equipment
A machine with a book value of $245,900 has an estimated sixyear life. A proposal is offered to sell the old machine for $217,400 and replace it with a new machine at a cost of $282,400. The new machine has a sixyear life with no residual value. The new machine would reduce annual direct labor costs from $50,900 to $40,700.
Prepare a differential analysis dated October 3 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). 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 with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)  
October 3  
Continue with Old Machine (Alternative 1) 
Replace Old Machine (Alternative 2) 
Differential Effect on Income (Alternative 2) 

Revenues:  
Proceeds from sale of old machine  $  $  $ 
Costs:  
Purchase price  
Direct labor (6 years)  
Income (Loss)  $  $  $ 
Should the company continue with the old machine (Alternative 1)
or replace the old machine (Alternative 2)?

Product A is produced for $3.58 per pound. Product A can be sold without additional processing for $4.02 per pound or processed further into Product B at an additional cost of $0.45 per pound. Product B can be sold for $4.32 per pound.
Prepare a differential analysis dated November 15 on whether to sell A (Alternative 1) or process further into B (Alternative 2). If required, round your answers to the nearest whole dollar. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Differential Analysis  
Sell Product A (Alt. 1) or Process Further into Product B (Alt. 2)  
November 15  
Sell Product A (Alternative 1) 
Process Further into Product B (Alternative 2) 
Differential Effect on Income (Alternative 2) 

Revenues, per unit  $  $  $ 
Costs, per unit  
Income (Loss), per unit  $  $  $ 
Should Product A be sold (Alternative 1) or processed further
into Product B (Alternative 2)?

Accept Business at Special Price
Product D is normally sold for $41 per unit. A special price of $31 is offered for the export market. The variable production cost is $23 per unit. An additional export tariff of 13% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order.
Prepare a differential analysis dated March 16, on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. 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  
Reject Order (Alt. 1) or Accept Order (Alt. 2)  
March 16  
Reject Order (Alternative 1) 
Accept Order (Alternative 2) 
Differential Effect on Income (Alternative 2) 

Revenues, per unit  $  $  $ 
Costs:  
Variable manufacturing costs, per unit  
Export tariff, per unit  
Income (Loss), per unit  $  $  $ 
Should the special order be rejected (Alternative 1) or accepted
(Alternative 2)?
Solution 1
Differential Analysis  
Continue Product A (Alt. 1) or Discontinue Product A (Alt. 2)  
May09  
Continue Product A (Alternative 1)  Discontinue Product A (Alternative 2)  Differential Effect on Income (Alternative 2)  
Revenues  195,000  0  195,000 
Costs:  
Variable cost of goods sold  115,700  0  115,700 
Variable selling and admin. Expenses  33,500  0  33,500 
Fixed costs  60,900  60,900  0 
Income (Loss)  15,100  60,900  45,800 
Product A should be continued as continuing will increase loss by $45,800
Get Answers For Free
Most questions answered within 1 hours.