Given: You are CEO of ABC company which sells XZ1, XZ2 and XZ3. You are now looking at the income statement by product which shows the monthly profit for June.

	Income Statement of ABC company (Variable costing) For the month ended June 30, 2022
$(thousand)	XZ1	XZ2	XZ3	Total
# of unit sold	50000	30000	10000	90000
Sales revenue	50000	54000	25000	129000
Cost of goods sold	35000	36000	15000	86000
Gross margin	15000	18000	10000	43000
Variable costs	7500	7500	3500	18500
Contribution margin	7500	10500	6500	24500
Allocated fixed costs	7752	8372	3876	20000 *
Net income (loss)	-252	2128	2624	4500
($/unit)
Selling price per unit	1000	1800	2500
Costs of goods sold per unit	700	1200	1500
Variable expence per unit	150	250	350
Contribution margin per unit	150	350	650
Net income per unit	-5	71	262
* Fixed expenses are allocated to each product in proportion to the amount of the sales revenue.
Fixed expense allocation unit:	20000 / 129000 = 155 (seles revenue in $)
XZ1	155 * 50000 = 7752
XZ2	155 * 54000 = 8372
XZ3	155 * 25000 = 3876

Marketing directer told you that XZ1 shows a loss of $252,000, the the loss can be accumulated in the future even more. Thus, we should increase the selling price as soon as possible, or stop selling XZ1 immediately if it is not possible to increase the selling price. QUESTIONS (GIVE ALL CALCULATION) a.) Prepare the three-column format for your incremental analysis by entering correct numbers in the cells and choose the appropriate cost term.

	Income Statement of ABC company (Variable costing) For the month ended June 30, 2022
$ (thousand)	Total 3 Products (Current)	Total 2 Products (without XZ1)	Difference	Cost term (pick one from six)
Sales	???	???	???	Decremental revenue | Incremental cost | Costs saving (avoidable) | Opportunity cost | Sunk Cost | Decremental profit
Cost of goods sold (Direct costs)	???	???	???	Decremental revenue | Incremental cost | Costs saving (avoidable) | Opportunity cost | Sunk Cost | Decremental profit
Other variable costs (direct costs)	???	???	???	Decremental revenue | Incremental cost | Costs saving (avoidable) | Opportunity cost | Sunk Cost | Decremental profit
Allocated fixed costs (Indirect costs)	???	???	???	Decremental revenue | Incremental cost | Costs saving (avoidable) | Opportunity cost | Sunk Cost | Decremental profit
Net income (or loss)	???	???	???	Decremental revenue | Incremental cost | Costs saving (avoidable) | Opportunity cost | Sunk Cost | Decremental profit

Pick and write answer in cells that has ??? with calculation b.) Single-column analysis. Prepare the single-column format for your incremental analysis by entering correct numbers in the columns in yellow, and picking the appropriate titles.

Incremental Analysis
Dropping XZ1 ((pick one from eight)	$ (thousand)
Gained sales | Lost sales | Costs of goods sold | Other variable costs | Direct fixed costs | Allocated fixed costs | Net gain from dropping XZ1 | Net loss from dropping XZ1	???
Cost saving (avoidable if XZ1 is dropped) (Pick one from eight two times)
Gained sales | Lost sales | Costs of goods sold | Other variable costs | Direct fixed costs | Allocated fixed costs | Net gain from dropping XZ1 | Net loss from dropping XZ1	???
Gained sales | Lost sales | Costs of goods sold | Other variable costs | Direct fixed costs | Allocated fixed costs | Net gain from dropping XZ1 | Net loss from dropping XZ1	???
Net loss from droppimg XZ1 + Total saving: (Pick one from eight and calculate )
Gained sales | Lost sales | Costs of goods sold | Other variable costs | Direct fixed costs | Allocated fixed costs | Net gain from dropping XZ1 | Net loss from dropping XZ1	???

Pick and write answer in cells that has ??? with calculation c.) i. Based on the analysis, should XZ1 be dropped? (Y/N) ii.What is the contribution margin per unit for XZ1? ($/unit) iii. Statement "the more XZ1 is sold, the more the loss be" is correct of not? Pick one:

1. Yes.	The net income is $5 per unit, and the more the company sells XZ1 the more loss it will take.
2. Yes.	The net income per unit of XZ1 is all related to sales volume.
3. No.	The contribution margin is positive, and the more the company sells XZ1, the more it can recover the fixed costs, which may end up with a profit.
4. No.	The selling price of XZ1 ($1,000 per unit) will contribute the recovery of the fixed cost.

Pick and write answer with calculation