A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year:
Sales$234,400Cost of goods sold111,000Gross profit$123,400Operating expenses142,000Loss from operations$(18,600)
It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
a.IF WE differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss.
P) Music and Podcasts, Free ar X CengageNOWv2 | Online teachin X Course Hero X New tab X + X https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false . . Ch. 25, Quiz B Differential Analysis 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 $234,400 Cost of goods sold 111,000 Gross profit $123,400 Operating expenses 142,000 Loss from operations $(18,600) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Royal 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 March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero 0". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Continue Royal Discontinue Royal Differential Effect Cola (Alternative 1) Cola (Alternative 2) on Income (Alternative 2) Revenues Costs: Variable cost of goods sold Variable operating expenses Type here to search O 9:46 PM 38 850F ~ 8/8/2021 741P) Music and Podcasts, Free ar X CengageNOWv2 | Online teachin X Course Hero X New tab X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false . . Ch. 25, Quiz B It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Royal 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 March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Continue Royal Discontinue Royal Differential Effect Cola (Alternative 1) Cola (Alternative 2) on Income (Alternative 2) Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) b. Should Star Cola be retained? Explain. OneDrive X Screenshot saved As indicated by the differential analysis in part (A), the income would by $ if the product is discontinued. The screenshot was added to your OneDrive. Type here to search O 9:46 PM 38 85.F 8/8/2021 741
