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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
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 Bowls Plates Cups Sales 564,200 589,300 $26.800 Cost of goods sold 26,100 32,500 14,100 Gross profit 538,100 556,800 512,700 Selling and administrative expenses 30,100 35,300 16,200 Income from operations $8,000 S21,500 $(3,500) Fixed costs are 15% of the cost of goods sold and 45% 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 Continue Cups (Alternative 1) Discontinue Cups (Alternative 2) Differential Effect on Income (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Income (Loss) b. Should the Cups line be retained
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