Discontinue a Segment

Product Omega has revenue of $193,800, variable cost of goods sold of $115,600, variable selling expenses of $33,500, and fixed costs of $58,500, creating an operating loss of $(13,800).

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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.

Line Item DescriptionContinue Product Omega (Alternative 1)Discontinue Product Omega (Alternative 2)Differential Effects (Alternative 2)Revenues$Revenues$Revenues$RevenuesCosts: Variable cost of goods soldVariable cost of goods soldVariable cost of goods soldVariable cost of goods soldVariable selling and admin. expensesVariable selling and admin. expensesVariable selling and admin. expensesVariable selling and admin. expensesFixed costsFixed costsFixed costsFixed costsProfit (loss)$Profit (loss)$Profit (loss)$Profit (loss)

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