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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 $64,700 $90,400 $26,700
Cost of goods sold 27,000 33,400 14,700
Gross profit $37,700 $57,000 $12,000
Selling and administrative expenses 29,700 34,600 14,500
Income from operations $8,000 $22,400 $(2,500)

Fixed costs are 12% of the cost of goods sold and 41% 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 $fill in the blank a77d910bb021015_1 $fill in the blank a77d910bb021015_2 $fill in the blank a77d910bb021015_3
Costs:
Variable cost of goods sold fill in the blank a77d910bb021015_4 fill in the blank a77d910bb021015_5 fill in the blank a77d910bb021015_6
Variable selling and admin. expenses fill in the blank a77d910bb021015_7 fill in the blank a77d910bb021015_8 fill in the blank a77d910bb021015_9
Fixed costs fill in the blank a77d910bb021015_10 fill in the blank a77d910bb021015_11 fill in the blank a77d910bb021015_12
Income (Loss) $fill in the blank a77d910bb021015_13 $fill in the blank a77d910bb021015_14 $fill in the blank a77d910bb021015_15

b. Should the Cups line be retained?

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