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Discontinue a Segment Product AG52 has revenues of $193,000, variable cost of goods sold of $113,700,...

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).

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Homework Answers

Answer #1
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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