Discontinue a Segment
Product AG52 has revenues of $193,000, variable cost of goods sold of $113,700, variable selling expenses of $31,700, and fixed costs of $58,200, creating a loss from operations of $10,600.
a. Prepare a differential analysis as of October 7 to determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
Differential Analysis | |||
Continue Product AG52 (Alt. 1) or Discontinue Product AG52 (Alt. 2) | |||
October 7 | |||
Continue Product AG52 (Alternative 1) | Discontinue Product AG52 (Alternative 2) | Differential Effect on Income (Alternative 2) | |
Revenues | $fill in the blank 1a576109103cfd7_1 | $fill in the blank 1a576109103cfd7_2 | $fill in the blank 1a576109103cfd7_3 |
Costs: | |||
Variable cost of goods sold | fill in the blank 1a576109103cfd7_4 | fill in the blank 1a576109103cfd7_5 | fill in the blank 1a576109103cfd7_6 |
Variable selling expenses | fill in the blank 1a576109103cfd7_7 | fill in the blank 1a576109103cfd7_8 | fill in the blank 1a576109103cfd7_9 |
Fixed costs | fill in the blank 1a576109103cfd7_10 | fill in the blank 1a576109103cfd7_11 | fill in the blank 1a576109103cfd7_12 |
Income (Loss) | $fill in the blank 1a576109103cfd7_13 | $fill in the blank 1a576109103cfd7_14 | $fill in the blank 1a576109103cfd7_15 |
b. Determine if Product AG52 should be
continued (Alternative 1) or discontinued (Alternative
2).
a | |||
Differential Analysis | |||
Continue Product AG52 (Alt. 1) or Discontinue Product AG52 (Alt. 2) | |||
October 7 | |||
Continue Product AG52 (Alternative 1) |
Discontinue Product AG52 (Alternative 2) |
Differential Effect on Income (Alternative 2) |
|
Revenues | 0 | 193000 | -193000 |
Costs: | |||
Variable cost of goods sold | 0 | -113700 | 113700 |
Variable selling expenses | 0 | -31700 | 31700 |
Fixed costs | -58200 | -58200 | 0 |
Income (Loss) | -58200 | -10600 | -47600 |
b | |||
Product AG52 should be continued |
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