Product AG52 has revenues of $195,600, variable cost of goods sold of $114,200,
ID: 2398751 • Letter: P
Question
Product AG52 has revenues of $195,600, variable cost of goods sold of $114,200, variable selling expenses of $31,600, and fixed costs of $58,100, creating a loss from operations of $8,300.
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.
b. Determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2).
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 $ $ $ Costs: Variable cost of goods sold Variable selling expenses Fixed costs Income (Loss) $ $ $Explanation / Answer
Answer 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 195,600.00 - (195,600.00) Costs: Variable cost of goods sold 114,200.00 - 114,200.00 Variable selling expenses 31,600.00 - 31,600.00 Fixed costs 58,100.00 58,100.00 - Income (Loss) (8,300.00) (58,100.00) (49,800.00) Answer b. Product AG52 should be continued. If Discountinued the Loss will be increased by $49,800.
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