Discontinue a Segment Product T has revenue of $194,400, variable cost of goods

ID: 2436544 • Letter: D

Question

Discontinue a Segment Product T has revenue of $194,400, variable cost of goods sold of $116,500, variable selling expenses of $33,600, and fixed costs of $59,500, creating a loss from operations of $15,200 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 zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Continue Product T (Alt. 1) or Discontinue Product T (Alt. 2) May 9 ontinue Product Discontinue Product Differential Effect T (Alternative 1) T (Alternative 2) native 2) Revenues 194,400 V Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Income (Loss)

Explanation / Answer

Answer:

Differential Analysis

Continue (Alternative 1) or Discontinue (Alternative 2) Product T

12-Sep-16

Continue Product T

Discontinue Product T

Differential Effect on Income

(Alternative 1)

(Alternative 2)

Revenue

194,400

-194,400

Costs:

Variable cost of goods sold

116500

selling and admin expanses

33600

Fixed cost

59500

Income (Loss)

-15,200

-59500

-44,300

Product T should be continued