Differential Analysis Report for a Discontinued Product A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year: Sales $234,000 Cost of goods sold (109,000) Gross profit $125,000 Operating expenses (145,000) Operating loss $(20,000) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since R is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Discontinued Operation:- When a company needs to shut one operation due to heavy cost or loss incurring from those operations.
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