Product Alpha has revenue of $102,960, variable cost of goods sold of $51,890, variable selling expenses of $21,440, and fixed costs of $36,320, creating a loss from operations of $6,690. Required: 1. Prepare a differential analysis as of December 10 to determine whether Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2), assuming that fixed costs are unaffected by the decision. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. 2. Determine if Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2).
Differential analysis | |||||||
Continue (Alt 1) or discontinue (Alt 2) Product Alpha | |||||||
Continue | Discontinue | Differential | |||||
(Alt 1) | (Alt 2) | effect | |||||
on income | |||||||
Revenues | 102,960 | 0 | -102,960 | ||||
Costs: | |||||||
Variable cost of goods sold | -51,890 | 0 | 51,890 | ||||
Variable selling expense | -21,440 | 0 | 21,440 | ||||
Fixed | -36,320 | -36,320 | 0 | ||||
total costs | -109,650 | -36,320 | 73,330 | ||||
income(loss) | -6,690 | -36,320 | -29,630 | ||||
2) | Continue with the product Alpha | ||||||
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