Discontinue a Segment

Product Tango has revenue of $194,700, variable cost of goods sold of $115,500, variable selling expenses of $33,700, and fixed costs of $59,600, creating an operating loss of $(14,100).

Question Content Area

a. Prepare a differential analysis as of February 13 to determine if Product Tango 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 Product Tango (Alt. 1) or Discontinue Product Tango (Alt. 2) February 13

	Continue Product Tango (Alternative 1)	Discontinue Product Tango (Alternative 2)	Differential Effects (Alternative 2)
Revenues
Costs:
Variable cost of goods sold
Variable selling and admin. expenses
Fixed costs
Profit (Loss)

Question Content Area

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