Product TS-20 has revenue of $102,910, variable cost of goods sold of $51,920, v

Question

Product TS-20 has revenue of $102,910, variable cost of goods sold of $51,920, variable selling expenses of $21,010, and fixed costs of $34,330, creating a loss from operations of $4,350.

The area of accounting concerned with the effect of alternative courses of action on revenues and costs.

required.

Question not attempted.

Differential Analysis

Continue (Alternative 1) or Discontinue (Alternative 2) Product TS-20

September 12, 2016

1

Continue Product TS-20

Discontinue Product TS-20

Differential Effect on Income

2

(Alternative 1)

(Alternative 2)

(Alternative 2)

3

4

Costs:

5

6

7

8

9

Determine if Product TS-20 should be continued (Alternative 1) or discontinued (Alternative 2).

The company is indifferent since the result is the same regardless of which alternative is chosen.

Continued

Discontinued

Required: 1. Prepare a differential analysis

The area of accounting concerned with the effect of alternative courses of action on revenues and costs.

as of September 12 to determine if Product TS-20 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. 2. Determine if Product TS-20 should be continued (Alternative 1) or discontinued (Alternative 2).

Explanation / Answer

continue Discontinue Differential product product effect on B B income Revenue 102,910 -102,910 Costs: Variable cost of goods sold -51,920 51,920 variable selling and adm expenses -21,010 21,010 fixed costs -34,330 -34,330 0 income (loss) -4,350 -34330 -29,980 product B should be continued

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