Mastery Problem: Differential Analysis and Product Pricing WoolCorp WooCorp buys sheep wool from farmers. The company began operations in Sy of this year, and is making decisions on product offerings, pricing and vendors. The company is ccmining its method of assigning overhead to date ouve just been hired as a production manager at Walcore. Currently wool or makes the product law, clean wool to be used as stuffing or ination () woolyam for use in the textile industry and tra-thick yarn for us Upper management would like your recommendations regarding production de son regarding the current and proposed productes Continue/Disconti For the past yea Wolicompras espered with its hinduct.stra-thick rugam. The companies to consider whether to contine o continue manufacturing and in the product you decide to reports of the income related to three reduce to be your you the following codicamentThe coll dow come the differential Woolcorp Condensed Income Statement For the Year Ended December 11, 2018 Haw Wool Wool Yarn Rus Yarn Total Co 200.000 155.000 1197,000 1552.000 Corso Varble costs 4000 00 01190 $10.00 Hudo 2.00 12,400 (4.790 169.190 tal cost of woods 0.000 1000 (01010 (1790 Mastery Probleme Differential Analysis and Product Pricing WoolCorp WoolCorp buys sheep's wool from farmers. The company began operation in wary of the year and is making decisions on product offerings, riding, and vendors. The company examining its method of assigning overhead to products. You Ve justed as a production manager at WoolCorp Currently wool or makes the products (1) rw.dean wed to be used as stuffing ortion () wool yarn for use in the title industry, and extra-thicken for sine Upper management would your recommendations regarding production dedikon regarding their current and proposed product lines Continue/Discontinue for the past year. Wool corpo intell with its third product, extra-thick rugam. The company wishes to consider whether to continuo discontinue manufacturing and selling this product. You decide to prepare any of the income lated to all the products. To begin your nou view the following condensed income statement. Then scroll down to cool the interential analysis WoolCorp Condensed Income Statement For the Year Ended December 31, 20YB Raw Wool Wool Yarn Rug Yam Total Company $200.000 $155,000 $197.000 $552.000 Sale Cost of goods old Worlable cocts 7.COM Total cost of goods old 540,000) (22.000) $(80,000) ${38,000) (12.400 337,190) (2-4.790 $(103,790) (69.10 (172.9801 5031.0001 61.990) Row Wool Wool Yarn Rug Yarn Total Company Sales $200,000 $155,000 $197.000 5552,000 Costs of goods sold: Variable costs 5[48,000) 18,600) ${37.190) $(103,700) Fixed costs (2.000) (12,400) (24,790) (69.190) Total cost of goods sold 3(80,000) $(31,000) 61.980) $(172,980) Gross profit $120,000 $124.000 $115.020 $329,020 Operating expenses Variable expenses $(5,000 $17,750) ${53,110) 365,100) Fixed expenses (89,000) (78,000) (106,200) (273.2001 Total operating expenses $(94,000) 5(85,750) $4150,210) 339,060) Operating locome (los) $25,000 538.250 5624,290) $39.960 Complete the following table using the data in the preceding income statement to compare the effects of dropping the rug van of products. If required, use a min tign to indicate a los Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Yarn (Alternative 2) December 31, 2018 Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative) Differential Effects (Alternative 2) Revenue Cost Vw Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative > Differential Effects (Alternative 2) Revenues Costs Variable Fored Pratitoss) Final Questions Answer the following question (1) then fill in table (2) 1. After reviewing your work on the contin Discontinue panel, should Woolcorp continue (Alternative 1) or discontinue (Alternative 2) the rug var product line? Continue (Alternative 1). 2. The following table shows several business decisions that might need to be made across the top row. Along the left hand column, there are important factors to consider Select the factor(s) that are important to the decision, Select all that apply the factor is not important to any of the decisions, otect ves on the "Hot Important" dropdown, otherwise select Lease or Sell No Sell or Special Price Continue or Not Process Further Order Make or Buy Discontinue Production to the eck Important NO Yes NO NO No NO NO No NO No Ves v NO Impact on regular prices Contribution margin per bottleneck hoor No STORS Answer the following question (1), then fill in table (2) 1. After reviewing your work on the Continue/Discontinue panel, should woolcorp contine (Alternative 1) or discontinue Alternative 2) the rug van product line Continun (Alternative 1). 2. The following table shows several business decisions that might need to be made across the top row. Along the left-hand column, there are important factors to consider Select the factor(s) that are important to the decision. Select all that ev. the factor is not important to any of the decisions, lever on the "Hot Important dropdown, otherwise elect no No Lease or Sellor Special Price Continue or Not Sell Process Further Order Make or Buy Discontinue Production Hottleneck Important Impact on regular prices No NO Yes No No No Ne Contribution margin per bottleneck hour NO No NO NO Yes NO Diterentist revenue is more than a cost Yes YOS Yes NO Yes NO No Supplier price is less than WoolCorp's variable cost per unit No NO NO Yes NO NO NO sunk tunes NO No No No NO No Yes Robinson-Patman Act NO NO Yes No NO No NO