Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The condensed product-line income statement for Dish N Dat Company for the month of March is as follows: Dish N Dat Company Product-Line Income Statement

The condensed product-line income statement for Dish N Dat Company for the month of March is as follows:

Dish N Dat Company

Product-Line Income Statement

For the Month Ended March 31, 2016

1

Bowls

Plates

Cups

2

Sales

$70,800.00

$106,170.00

$31,420.00

3

Cost of goods sold

32,650.00

42,340.00

16,780.00

4

Gross profit

$38,150.00

$63,830.00

$14,640.00

5

Selling and administrative expenses

27,790.00

42,350.00

16,560.00

6

Income from operations

$10,360.00

$21,480.00

$(1,920.00)

Fixed costs are 10% of the cost of goods sold and 50% of the selling and administrative expenses. Dish N Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued.

Required:
A. Prepare a differential analysis dated March 31, 2016, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
B. Should the Cups line be retained? Explain.

Labels and Amount Descriptions

Labels
Cash flows from investing activities
Costs
Amount Descriptions
Fixed costs
Gain on sale of investments
Income (loss)
Loss on sale of investments
Revenues
Total costs
Variable cost of goods sold
Variable selling and administrative expenses

Differential Analysis

Shaded cells have feedback.

A. Prepare a differential analysis dated March 31, 2016, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

Question not attempted.

Score: 0/89

Differential Analysis

Continue Cups (Alternative 1) or Discontinue Cups (Alternative 2)

March 31, 2016

1

Continue Cups

Discontinue Cups

Differential Effect on Income

2

(Alternative 1)

(Alternative 2)

(Alternative 2)

3

4

5

6

7

8

Points:

0 / 21

Feedback

Check My Work

A. For continue and discontinue alternatives subtract the costs from the revenue. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2.

Final Question

As indicated by the differential analysis in part (A), the income will decrease by _____________

if the Cups line is discontinued ?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

EAuditing Fundamentals Virtual Communication And Remote Auditing

Authors: J.P. Russell, Shauna Wilson

1st Edition

0873898486, 978-0873898485

More Books

Students also viewed these Accounting questions