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 negative numbers use a minus sign.
|Continue Product T (Alt. 1) or Discontinue Product T (Alt. 2)|
T (Alternative 1)
T (Alternative 2)
|Variable cost of goods sold|
|Variable selling expenses|
Determine if Product T should be continued (Alternative 1) or discontinued (Alternative
|Product||Product||effect on income|
|Variable cost of goods sold||-1,15,800||0||1,15,800|
|Variable selling expense||-33,800||0||33,800|
|Net financial disadvantage of Discontinuance is ($44200).|
|Hence, the Product T shall continue|
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