LOU UUS MLS CoStar Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola for the past year: Sales $233,300 Cost of goods sold 111,000 Gross profit $122,300 Operating expenses 142,000 Loss from operations $(19,700) It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses ar of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinue zero, enter zero "0". Use a minus sign to indicate a loss Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Differential Effect Continue Royal Discontinue Royal on Income Cola (Alternative 1) Cola (Alternative 2) (Alternative 2) Revenues 233,300 $ 233,300 Costs: Variable cost of goods sold Variable operating expenses Check My Work 2 more Check My Work uses remaining Save and Elevate + Project M Share Docs Phone Events O News Colab Douglas CMLS CoStar LoopNet C Cityfeet It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether Royal Coln should be continued (Alternative 1) or discontinued (Alternative 2). 1f an amount le zero, enter zero "O". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Continue Royal Discontinue Royal Differential Effect on Income Cola (Alternative 1) Cola (Alternative 2) (Alternative 2) Revenues 233,300 233,300 Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) b. Should Star Cola be retained? Explain the product is discontinued by Net As indicated by the differential analysis in part (A), the income would Previous Submit Agent for Grading Check My Work 2 more Check My Work uses remaining All work saved Elevate Project M Share Docs Phone Events GB News Colab Douglas MLS CoStar LeopNet C Cityfeet eBook Show Me How Calculator Differential Analysis for a Lease-or-Sell Decision Sure-Bilt Construction Company is considering selling excess machinery with a book value of $281,600 (original cost of $400,400 less accumulated depreciation of $118,800) for $274,000, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $294,600 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, Insurance, and property tax expenses are expected to be $24,600. a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Differential Effect Lease Machinery Sell Machinery (Alternative 1) (Alternative 2) on Income (Alternative 2) 274.000 Costs 24,600 X Income (Loss) 151,000 x 118.800 X 10,000 X Revenues 24,000 X 33.200 X Check My Work Subtract the lease costs from the lease revenues. Subtract the sel machinery costs from the sell machinery revenues. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. Next > Check My Work 1 more Check My Work uses remaining Alok