Question
Differential Analysis for a Discontinued Product The condensed product-line income statement for Dish N' Dat Company for the month of March is as follows:
Differential Analysis for a Discontinued Product The condensed product-line income statement for Dish N' Dat Company for the month of March is as follows: Dish N' Dat Company Product-Line Income Statement For the Month Ended March 31 Sales Cost of goods sold Gross profe Selling and administrative expenses Income from operations Bowls Plates Cups $64,400 $89,500 $27,600 26,600 33,000 15,200 $37,800 $55,900 $12,400 28,900 35,400 16,100 $8,900 $20,500 $(3,700) Fixed costs are 14% of the cost of goods sold and 39% of the selling and administrative expenses. Dish N' Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued. a. Prepare a differential analysis dated March 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate a loss. Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) March 31 Revenues Costs: Continue Cups Decontinue Cups (Alternative 1) (Aerative 2) Differential Effect on Income (Alternative 2) Variable cost of goods sold Variable selling and admin, expenses Fixed costs Income (Loss) 0000 0000 b. Should the Cups line be retained?
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