Johnson & Johnson, Inc. Condensed Income Statement For the Year Ended December 3, 2019 Baby Oil Dial Soap Shampoo Diapers Sales: $1,200,000 $3,500,000 $2,750,000 $6,200,000 Cost Of Goods Sold: Variable Costs $480,000 $1,200,000 $850,000 $4,250,000 Fixed Costs $50,000 $50,000 $75,000 $100,000 Total Cost of Goods Sold $530,000 $1,250,000 $925,000 $4,350,000 Gross Profit $670,000 $2,250,000 $1,825,000 $1,850,000 Operating Expenses

Variable Costs $125,000 $1,800,000 $1,875,000 $1,800,000 Fixed Costs $300,000 $375,000 $50,000 $200,000 Total Operating Expenses $425,000 $2,175,000 $1,925,000 $2,000,000 Income (Loss) From Op. $245,000 $75,000 ($100,000) A ($150,000)

	Discontinue Alternatives:
	Continue		Discontinue		Differential
	Shampoo		Shampoo		Effect on Income
Sales:
Costs:
Variable
Fixed
Income (Loss)				C
	Continue		Discontinue		Differential
	Diapers		Diapers		Effect on Income
Sales
Costs:
Variable
Fixed
Income (Loss)				D

(Transfer your results from the Discontinue Alternatives to make a recommendation)

Solution:

If I discontinue Shampoo:

Annual Loss from Retaining Diapers:(B) Annual Loss from Discontinuing Shampoo:(C) Total Annual Loss:

If I discontinue Diapers:

Annual Loss from Discontinuing Diapers: (D) Annual Loss from Retaining Shampoo: (A)

Total Annual Loss:

Answer: State which product would you recommend to discontinue and why?