Discontinue a Segment

Product Omega has revenue of $$195,000,$ variable cost of goods sold of $$115,400,$ variable selling expenses of $$32,900,$ and fixed costs of $$59,900,$ creating an operating loss of $$(13,200).$

Question Content Area

a$.$ Prepare a differential analysis as of January $15$ to determine if Product Omega should be continued $($Alternative $1)$ or discontinued $($Alternative $2),$ assuming fixed costs are unaffected by the decision. If an amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.

Differential Analysis

Continue $($Alt$.1)$ or Discontinue $($Alt$.2)$ Product Omega

January $15$

Line Item Description Continue

Product Omega

$($Alternative $1)$ Discontinue

Product Omega

$($Alternative $2)$ Differential

Effects

$($Alternative $2)$

Revenues $Revenues

$Revenues

$Revenues

Costs:

Variable cost of goods sold Variable cost of goods sold

Variable cost of goods sold

Variable cost of goods sold

Variable selling and admin. expenses Variable selling and admin. expenses

Variable selling and admin. expenses

Variable selling and admin. expenses

Fixed costs Fixed costs

Fixed costs

Fixed costs

Profit $($loss$)$ $Profit $($loss$)$

$Profit $($loss$)$

$Profit $($loss$)$

Question Content Area

b$.$ Determine if Product Omega should be continued $($Alternative $1)$ or discontinued $($Alternative $2).$