Question

roduct A has revenue of $195,000, variable cost of goods sold of $115,700, variable selling expenses...

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 six-year 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 six-year 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)?

Homework Answers

Answer #1

Solution 1

Differential Analysis
Continue Product A (Alt. 1) or Discontinue Product A (Alt. 2)
May-09
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

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Accept Business at Special Price Product A is normally sold for $41 per unit. A special...
Accept Business at Special Price Product A is normally sold for $41 per unit. A special price of $33 is offered for the export market. The variable production cost is $25 per unit. An additional export tariff of 16% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required,...
Accept Business at Special Price Product A is normally sold for $48 per unit. A special...
Accept Business at Special Price Product A is normally sold for $48 per unit. A special price of $32 is offered for the export market. The variable production cost is $25 per unit. An additional export tariff of 12% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required,...
Product D is normally sold for $45 per unit. A special price of $32 is offered...
Product D is normally sold for $45 per unit. A special price of $32 is offered for the export market. The variable production cost is $25 per unit. An additional export tariff of 14% 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...
Accept Business at Special Price Product R is normally sold for $49 per unit. A special...
Accept Business at Special Price Product R is normally sold for $49 per unit. A special price of $34 is offered for the export market. The variable production cost is $25 per unit. An additional export tariff of 16% 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,...
A restaurant bakes its own bread for a cost of $164 per unit (100 loaves), including...
A restaurant bakes its own bread for a cost of $164 per unit (100 loaves), including fixed costs of $32 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 August 16, to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread, assuming fixed costs are unaffected by the decision. If an amount is zero, enter zero...
Discontinue a Segment Product A has revenue of $195,100, variable cost of goods sold of $116,500,...
Discontinue a Segment Product A has revenue of $195,100, variable cost of goods sold of $116,500, variable selling expenses of $32,400, and fixed costs of $61,400, creating a loss from operations of $15,200. 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...
A company is considering replacing an old piece of machinery, which cost $599,600 and has $351,200...
A company is considering replacing an old piece of machinery, which cost $599,600 and has $351,200 of accumulated depreciation to date, with a new machine that has a purchase price of $483,900. The old machine could be sold for $62,700. The annual variable production costs associated with the old machine are estimated to be $158,000 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,400 per year for eight years. a.1...
Discontinue a Segment Product T has revenue of $193,800, variable cost of goods sold of $115,800,...
Discontinue a Segment Product T has revenue of $193,800, variable cost of goods sold of $115,800, variable selling expenses of $33,800, and fixed costs of $59,800, creating a loss from operations of $15,600. Prepare a differential analysis as of May 9, to determine whether Product T 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...
#8 Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost...
#8 Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $598,800 and has $352,100 of accumulated depreciation to date, with a new machine that has a purchase price of $483,300. The old machine could be sold for $62,700. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,500 per year...
#8 Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost...
#8 Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $598,800 and has $352,100 of accumulated depreciation to date, with a new machine that has a purchase price of $483,300. The old machine could be sold for $62,700. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,500 per year...