Differential Analysis Report for a Discontinued Product The condensed product-li

Question

Differential Analysis Report for a Discontinued Product The condensed product-line income statement for Porcelain Tableware Company is as follows: Porcelain Tableware Company Product-Line Income Statement Cups $272,000 150,000 $122,000 154,000 $32,000) Bowls Sales Cost of goods sold Gross profit Selling and administrative expenses Income (loss) from operations $643,000 254,000 $389,000 291,000 $98,000 Plates $895,000 332,000 $563,000 357,000 $206,000 costs are 36% of the cost of good$ sold and 14% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be significantly affected if the Cups line were discontin Hide a. Prepare a differential analysis report for all three products. Enter all amounts as positive numbers. Porcelain Tableware Company Differential Product Analysis Report Bowls Plates Cups Differential revenue from monthly sales: Revenue from sales Differential costs of monthly sales: Variable cost of goods sold Variable selling and adminis Monthly differential income from sales

Explanation / Answer

Solution: Differential product analysis report:

Particulars Bowls Plates Cups Differential Revenue from monthly sales: Revenue from sales 643,000 895,000 272,000 Differential costs of monthly sales: Variable cost of goods sold (64%*COGS) 162,560 212,480 96,000 Variable selling and administrative expense (86%*SAE) 250,260 307,020 132,440 Fixed costs [(36%*COGS)+(14%*SAE)] 132,180 169,500 75,560 Monthly Differential income from sales 98,000 206,000 (32,000)

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