Question

In: Accounting

Product J is one of the many products manufactured and sold by Oceanside Company. An income...

Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net loss for Product J of $2,750. This net loss resulted from sales of $275,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year. Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued.

Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J. If an amount box does not require an entry, leave it blank.

Differential Analysis
Proposal to Discontinue Product J
February 8
Continue Product J Discontinue Product J Differential Effect on Income
$ $ $
Costs:
$ $ $
$
Total costs
Income (loss) $

Solutions

Expert Solution

Solution:

Differential Analysis
Proposal to Discontinue Product J
Feb-08
Continue Product J Discontinue Product J Differential Effect on Income
Revenues $2,75,000 $0 -$2,75,000
Costs:
Variable costs $1,82,000 $0 $1,82,000
Fixed costs $90,250 $90,250 $0
Total costs $2,72,250 $90,250 $1,82,000
Income (Loss) $2,750 -$90,250 -$93,000


Related Solutions

Product J is one of the many products manufactured and sold by Oceanside Company. An income...
Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net loss for Product J of $12,250. This net loss resulted from sales of $260,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J...
QUESTION ONE The following information relates to the only product manufactured and sold by Namwela limited....
QUESTION ONE The following information relates to the only product manufactured and sold by Namwela limited. K per Unit Selling price 50 Direct Material cost 14 Direct labour cost 16 Variable production overhead 10 Fixed production overhead 1.80 Variable sales and marketing overhead 1.00 The following level of activity took place over the first two years of the product’s life: Sales ( units) production ( units) Year 1 13,000 14,000 Year 2 12,500 11,500 ADDITIONAL INFORMATION 1. Budgeted fixed production...
A company sells two products, A and B. Product A Product B Produced and sold 8.000...
A company sells two products, A and B. Product A Product B Produced and sold 8.000 units 16.000 units Sale price per unit 65 52 Variable cost per unit 35 30 Fixed cost per unit 15 15 Fixed cost is divided in a traditional way, based on the produced quantity. The company started to design a new product C to replace product B. The company could sell 11.000 units of product C with a selling price of 80 per unit....
One product produced and sold by Backstrom’s Backyard Products is a water fountain for which 2019...
One product produced and sold by Backstrom’s Backyard Products is a water fountain for which 2019 projections are as follows: Projected volume in units                                                                             100,000 Sales price per unit                                                                                          $75 Variable production cost per unit                                                              $30 Variable selling cost per unit                                                                        $15 Fixed production cost                                                                                     $800,000 Fixed selling and administration costs                                                     $400,000 Compute the projected pretax profit to be earned on the water fountains in 2019. (Pretax profit will be 1,800,000 – show your work.) Management estimated that unit volume...
1. A company produces products A and B using the same plant. Product A is sold...
1. A company produces products A and B using the same plant. Product A is sold in the market at a price of 300 EUR, which is 60 EUR above its cost per unit. A company produces 2.000 units of product A and 1.000 units of product B. Product B’s cost per unit is 150 EUR, while the price at which product B is sold in the market is 120 EUR. Costs per unit for both products were calculated by...
Consider the bill of material for Product "J": To make one unit of "J", it needs...
Consider the bill of material for Product "J": To make one unit of "J", it needs one unit of "K" and two units of "M". To make one unit of K, it requires 4 units (Corrected) of "L" . The gross requirements for J are 200 units in week 6 and 250 units in week 8.   Use the data given in the following table, develop the MRP tables for each item for an 8-week planning period. Use the lot-for-lot lot-sizing rule....
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago,...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.60 hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC 40 requires only 0.20 hours of direct labor...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago,...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.80 hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC 40 requires only 0.40 hours of direct labor...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago,...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.80 hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC 40 requires only 0.60 hours of direct labor...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago,...
For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.60 hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC 40 requires only 0.20 hours of direct labor...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT