Differential Analysis Report for a Discontinued Product

The condensed product-line income statement for Porcelain Tableware Company is as follows:

PORCELAIN TABLEWARE COMPANY Product-Line Income Statement
	Light Roast			Medium Roast			Dark Roast
Sales	$642,000			$894,000			$268,000
Cost of goods sold	(263,000)			(328,000)			(151,000)
Gross profit	$379,000			$566,000			$117,000
Selling and administrative expenses	(285,000)			(355,000)			(151,000)
Operating income (loss)	$94,000			$211,000			$(34,000)

Fixed costs are 36% of the cost of goods sold and 17% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be significantly affected if the Dark Roast line were discontinued.

Question Content Area

a. Prepare a differential analysis report for all three products.

PORCELAIN TABLEWARE COMPANY Product-Line Income Statement Differential Analysis Report

	Light Roast	Medium Roast	Dark Roast
Differential revenue from monthly sales:
Accounts receivableCashFixed selling and administrative expensesRevenue from salesVariable cost of goods soldRevenue from sales	$Revenue from sales	$Revenue from sales	$Revenue from sales
Differential cost of monthly sales:
Accounts receivableFixed cost of goods soldFixed selling and administrative expensesRevenue from salesVariable cost of goods soldVariable cost of goods sold	$Variable cost of goods sold	$Variable cost of goods sold	$Variable cost of goods sold
Accounts receivableFixed cost of goods soldFixed selling and administrative expensesRevenue from salesVariable selling and administrative expensesVariable selling and administrative expenses Incorrect	Variable selling and administrative expenses	Variable selling and administrative expenses	Variable selling and administrative expenses
Total differential costs	$fill in the blank 58d57102afa0fc1_13	$fill in the blank 58d57102afa0fc1_14	$fill in the blank 58d57102afa0fc1_15
Monthly differential income from sales	$fill in the blank 58d57102afa0fc1_16	$fill in the blank 58d57102afa0fc1_17	$fill in the blank 58d57102afa0fc1_18