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The condensed product-line income statement for Suffolk China Ware Company for the month of May is as follows: Suffolk China Ware Company Product-Line Income
The condensed product-line income statement for Suffolk China Ware Company for the month of May is as follows: Suffolk China Ware Company Product-Line Income Statement For the Month Ended May 31 Bowls Plates Cups Sales $64,900 $88,700 $26,000 Cost of goods sold 25,300 33,000 14,800 Gross profit $39,600 $55,700 $11,200 Selling and administrative expenses Income from operations 28,700 $10,900 34,000 $21,700 15,200 $(4,000) Fixed costs are 17% of the cost of goods sold and 36% of the selling and administrative expenses. Suffolk China Ware 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). If an amount is zero, enter "0", For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) For the Month Ended May 31 Continue Cups (Alternative 1) Differential Effect Discontinue Cups (Alternative 2) on Income (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin. expense 10
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