Accounting, Chapters 14-26
27th Edition
ISBN: 9781337514095
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 25, Problem 25.2APE
To determine
Differential Analysis: Differential analysis refers to the analysis of differential revenue that could be gained or differential cost that could be incurred from the available alternative options of business.
To Determine: Whether to continue or discontinue Product A.
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Discontinue a Segment
Product X has revenue of $94,800, variable cost of goods sold of $61,200, variable selling expenses of $39,700, and fixed costs of $36,000, creating a loss from operations of $42,100.
Prepare a differential analysis as of May 9 to determine whether to Continue Product X (Alternative 1) or Discontinue Product X (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 X (Alt. 1) or Discontinue Product X (Alt. 2)
May 9
ContinueProduct X(Alternative 1)
DiscontinueProduct X(Alternative 2)
DifferentialEffects(Alternative 2)
Revenue
Costs:
Variable cost of goods sold
Variable selling expenses
Fixed costs
Profit (loss)
Determine if Product X should be continued (Alternative 1) or discontinued (Alternative 2).
Discontinue a Segment
Product X has revenue of $94,800, variable cost of goods sold of $61,200, variable selling expenses of $39,700, and fixed costs of $36,000, creating a loss from operations of $42,100.
Prepare a differential analysis as of May 9 to determine whether to Continue Product X (Alternative 1) or Discontinue Product X (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 X (Alt. 1) or Discontinue Product X (Alt. 2)
May 9
Contine
Discontinue
Differential
Product X
Product X
Effects
(Alternative 1)
(Alternative 2)
(Alternative 2)
Revenue
$
$
$
Costs:
------------------
------------------
----------------
Variable cost of goods sold
Variable selling expenses
Fixed costs
Profit (loss)
$
$
$
Determine if Product X should be continued…
Discontinue a Segment
Product A has revenue of $195,700, variable cost of goods sold of $114,800, variable selling expenses of $31,100, and fixed costs of $60,200, creating a loss
from operations of $10,400.
Prepare a differential analysis as of May 9, to determine whether Product A 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 A (Alt. 1) or Discontinue Product A (Alt. 2)
May 9
Differential Effect
Discontinue Product
A (Alternative 2)
Continue Product
A (Alternative 1)
on Income
(Alternative 2)
Revenues
Costs:
Variable cost of goods sold
Variable selling expenses
Fixed costs
Continued
Discontinued
ct A should be continued (Alternative 1) or discontinued (Alternative 2)
De
Chapter 25 Solutions
Accounting, Chapters 14-26
Ch. 25 - Explain the meaning of (a) differential revenue,...Ch. 25 - A company could sell a building for 250,000 or...Ch. 25 - A chemical company has commodity-grade and...Ch. 25 - A company accepts incremental business at a...Ch. 25 - A company fabricates a component at a cost of...Ch. 25 - Prob. 6DQCh. 25 - In the long run, the normal selling price must be...Ch. 25 - Although the cost-plus approach to product pricing...Ch. 25 - How does the target cost concept differ from...Ch. 25 - Prob. 10DQ
Ch. 25 - Under what conditions might a company use...Ch. 25 - Lease or sell Duncan Company owns a machine with a...Ch. 25 - Lease or sell Timberlake Company owns equipment...Ch. 25 - Prob. 25.2APECh. 25 - Discontinue a segment Product B has revenue of...Ch. 25 - Make or buy A restaurant bakes its own bread for a...Ch. 25 - Make or buy A company manufactures various sized...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Prob. 25.5APECh. 25 - Process or sell Product D is produced for 24 per...Ch. 25 - Accept business at special price Product AA is...Ch. 25 - Prob. 25.6BPECh. 25 - Product cost markup percentage Light force Inc....Ch. 25 - Product cost markup percentage Green Thumb Garden...Ch. 25 - Bottleneck profit Product A has a unit...Ch. 25 - Prob. 25.8BPECh. 25 - Activity-based costing Mainline Marine Company has...Ch. 25 - Activity-based costing Casual Cuts Inc. has total...Ch. 25 - Differential analysis for a lease-or-sell decision...Ch. 25 - Prob. 25.2EXCh. 25 - Prob. 25.3EXCh. 25 - Differential analysis for a discontinued product...Ch. 25 - Segment analysis for a service company Charles...Ch. 25 - Decision to discontinue a product On the basis of...Ch. 25 - Make or buy decision Diamond Computer Company has...Ch. 25 - Make-or-buy decision for a service company The...Ch. 25 - Machine replacement decision A company is...Ch. 25 - Differential analysis for machine replacement Kim...Ch. 25 - Sell or process further Big Fork Lumber Company...Ch. 25 - Prob. 25.12EXCh. 25 - Decision on accepting additional business...Ch. 25 - Accepting business at a special price Portable...Ch. 25 - Prob. 25.15EXCh. 25 - Accepting business at a special price for a...Ch. 25 - Product cost concept of product pricing La Femme...Ch. 25 - Product cost concept of product costing Smart...Ch. 25 - Target costing Toyota Motor Corporation uses...Ch. 25 - Target costing Instant Image Inc. manufactures...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Activity-based costing CardioTrainer Equipment...Ch. 25 - Activity-based costing Zeus Industries...Ch. 25 - Activity rates and product costs using...Ch. 25 - Total cost concept of product pricing Based on the...Ch. 25 - Variable cost concept of product pricing Based on...Ch. 25 - Differential analysis involving opportunity costs...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Prob. 25.4APRCh. 25 - Prob. 25.5APRCh. 25 - Prob. 25.6APRCh. 25 - Activity-based costing Pure Cane Sugar Company...Ch. 25 - Prob. 25.1BPRCh. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Differential analysis for further processing The...Ch. 25 - Prob. 25.5BPRCh. 25 - Product pricing and profit analysis with...Ch. 25 - Activity-based costing Southeastern Paper Company...Ch. 25 - Ethics in Action Aaron McKinney is a cost...Ch. 25 - Communication The following conversation took...Ch. 25 - Decision on accepting additional business A...Ch. 25 - Accept business at a special price for a service...Ch. 25 - Identifying product cost distortion Peachtree...
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