Product A has revenue of $195,600, variable cost of goods sold of $114,200, variable selling expenses of $33,900, and fixed costs of$59,200, creating a loss from operations of $11,700.Prepare a differential analysis as of May 9, to determine whether Product A should be continued (Alternative 1) or discontinued (Alternative2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "O". For those boxes in which you must enter subtractedor negative numbers use a minus signDifferential AnalysisContinue Product A (Alt. 1) or Discontinue Product A (Alt. 2)May 9Differential EffectContinue ProductDiscontinue Producton IncomeA (Alternative 1)A (Alternative 2)(Alternative 2)195,600-195,600RevenuesCosts:-114,200 X114,200 XVariable cost of goods sold33,900 X-33,900 XVariable selling expenses59,200 XX59,200Fixed costs11,700-59,200-47,500Income (Loss)

Differential analysis: Differential analysis refers to the analysis of differential revenue that…

Answered: Product A has revenue of $195,600,…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter25: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 2BE

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Mario Company is considering discontinuing a product. The costs of the product consist of $20,000 fixed costs and $15,000 variable costs. The variable operating expenses related to the product total $4,000. What is the differential cost? A. $19,000 B. $15,000 C. $35,000 D. $39,000
Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.
The following information pertains to Vladamir, Inc., for last year: There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next. Required: 1. How many units are in ending inventory? 2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 3. Assume the selling price per unit is 29. Prepare an income statement using (a) variable costing and (b) absorption costing.
Differential analysis for a discontinued product A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year: It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 25% of the operating expenses are fixed. Because Mango Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). b. Should Mango Cola be retained? Explain.
The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31: Assume that 8,500 million of cost of goods sold and 4,000 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Also, assume that 30% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million. b. Explain the difference between the amount of operating income reported under the absorption costing and variable costing concepts. Round numbers to nearest million.
Grainger Company produces only one product and sells that product for $100 per unit. Cost information for the product is: Selling expenses are $4 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory. A. Compute net income under absorption costing variable costing B. Reconcile the difference between the income under absorption and variable costing.
Product T has revenue of $193,800, variable cost of goods sold of $113,400, variable selling expenses of $32,000, and fixed costs of $60,500, creating a loss from operations of $12,100. 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 "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 Continue ProductT (Alternative 1) Discontinue ProductT (Alternative 2) Differential Effecton Income(Alternative 2) Revenues $fill in the blank f95665055014074_1 $fill in the blank f95665055014074_2 $fill in the blank f95665055014074_3 Costs: Variable cost of goods sold fill in the blank f95665055014074_4 fill in the blank f95665055014074_5 fill in the blank…
Product AG52 has revenue of $748,000, variable cost of goods sold of $640,000, variableselling expenses of $90,000, and fixed costs of $50,000, creating a loss from operations of$32,000. Prepare a differential analysis as of October 7 to determine if Product AG52 should becontinued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffectedby the decision
Product AG52 has revenues of $195,200, variable cost of goods sold of $113,000, variable selling expenses of $33,500, and fixed costs of $60,900, creating a loss from operations of $12,200. 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. 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 $fill in the blank 1c1f21f34fb4f8c_1 $fill in the blank 1c1f21f34fb4f8c_2 $fill in the blank 1c1f21f34fb4f8c_3 Costs: Variable cost of goods sold fill in the blank 1c1f21f34fb4f8c_4 fill in the blank 1c1f21f34fb4f8c_5 fill in the blank 1c1f21f34fb4f8c_6 Variable selling…
Product Tango has revenue of $194,600, variable cost of goods sold of $114,200, variable selling expenses of $32,800, and fixed costs of $60,200, creating an operating loss of $(12,600). a. Prepare a differential analysis as of February 13 to determine if Product Tango should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue Product Tango (Alt. 1) or Discontinue Product Tango (Alt. 2) February 13 ContinueProductTango(Alternative 1) DiscontinueProductTango(Alternative 2) DifferentialEffects(Alternative 2) Revenues $fill in the blank 6c51bc020070005_1 $fill in the blank 6c51bc020070005_2 $fill in the blank 6c51bc020070005_3 Costs: Variable cost of goods sold fill in the blank 6c51bc020070005_4 fill in the blank 6c51bc020070005_5 fill in the blank 6c51bc020070005_6 Variable…
Product Alpha has revenue of $101,590, variable cost of goods sold of $51,430, variable selling expenses of $21,010, and fixed costs of $36,680, creating a loss from operations of $7,530. Required: 1. Prepare a differential analysis as of December 10 to determine whether Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2), assuming that 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 Alpha should be continued (Alternative 1) or discontinued (Alternative 2). Prepare a differential analysis as of December 10 to determine whether Product Alpha should be continued (Alternative 1) or discontinued (Alternative 2), assuming that fixed…
Product B has revenue of $39,500, variable cost of goods sold of $25,500, variableselling expenses of $16,500, and fixed costs of $15,000, creating a loss from operationsof $17,500. Prepare and show in solution a differential analysis as of May 9 todetermine if Product B should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision.

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