Figure 7.1 Differential Analysis for Universal Accountancy

Kabul Express is a small coffee shop in Kurdistan and looking for expansion. The company is evaluating two alternativessandwiches and cookies. Annual projections for sales of sandwiches are sales, $180,000; variable costs, $130,000; and fixed costs, $500. Annual projections for sales of cookies are sales, $100,000; variable costs, $30,000; and no additional fixed costs. Using the format in Figure 7.1 "Differential Analysis for Universal Accountancy", perform differential analysis to determine which alternative is more profitable, and by how much. Assume adding sandwiches is Alternative 1 and adding cookies is Alternative 2. Present your data on an excel sheet. You can also add graphs for impactful data presentation.

Sales revenue Variable costs Contribution margin Fixed costs Profit Alternative 1 (Keep All Customers) $7,000,000 5,250,000 $1,750,000 450,000 $1,300,000 Alternative 2 (Drop Unprofitable Customers) $6,000,000 = 4,500,000 = $1,500,000 180,000 = $1,320,000 = Differential Amount $1,000,000 750,000 $ 250,000 270,000 $ (20,000) Alternative 11s Higher Higher Higher Higher Lower