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Please use excel table for format? Differential Effect on Income (Alternative 2) Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) For the
Please use excel table for format?
Differential Effect on Income (Alternative 2) Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) For the Month Ended May 31 Continue Discontinue Cups Cups (Alternative 1) (Alternative 2) Revenues $ Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Income (loss) b. The Cups line should be since income would by if the cups is discontinued. b. Should Star EX 25-4 Differential analysis for a discontinued product OBJ. 1 The condensed product-line income statement for Dish N' Dat Company for the month of May is as follows: Cups Dish N'Dat Company Product-Line Income Statement For the Month Ended May 31 Bowls Plates Sales $71,000 $105,700 Cost of goods sold 32,600 42,300 Gross profit $38,400 $ 63,400 Selling and administrative expenses 27,400 42,800 Income from operations $11,000 $ 20,600 $33,500 20,600 $12,900 17,200 $(4,300) Fixed costs are 15% of the cost of goods sold and 30% of the selling and administra- tive expenses. Dish N' Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued. a. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). b. Should the Cups line be retained? Explain. OBJ. 1Step by Step Solution
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