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Differential Analysis Report for a Discontinued Product The condensed product-line income statement for Porcelain Tableware Company...

Differential Analysis Report for a Discontinued Product

The condensed product-line income statement for Porcelain Tableware Company is as follows:

PORCELAIN TABLEWARE COMPANY
Product-Line Income Statement
Bowls Plates Cups
Sales $658,000 $903,000 $272,000
Cost of goods sold (271,000) (335,000) (154,000)
Gross profit $387,000 $568,000 $118,000
Selling and administrative expenses (289,000) (344,000) (144,000)
Operating income (loss) $98,000 $224,000 $(26,000)

Fixed costs are 42% of the cost of goods sold and 16% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be significantly affected if the Cups line were discontinued.

a. Prepare a differential analysis report for all three products.

PORCELAIN TABLEWARE COMPANY
Product Income
Differential Analysis Report
Bowls Plates Cups
Differential revenue from monthly sales:
Revenue from sales $ $ $
Differential costs of monthly sales:
Variable cost of goods sold $ $ $
Variable selling and administrative expenses
$ $ $
Monthly differential income from sales $ $ $

Solutions

Expert Solution

By mistakely, we can write selling and distribution expense, please consider them as selling and administrative expenses.

ekkarill92 answered 1 year ago
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