Product AG52 has revenues of $195,600, variable cost of goods sold of $114,200, variable selling expenses...

Product AG52 has revenues of $195,600, variable cost of goods sold of $114,200, variable selling expenses of $31,600, and fixed costs of $58,100, creating a loss from operations of $8,300.

a. Prepare a differential analysis as of October 7 to determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Use a minus sign to indicate a loss.

Differential Analysis
Continue Product AG52 (Alt. 1) or Discontinue Product AG52 (Alt. 2)
October 7
	Continue Product AG52 (Alternative 1)	Discontinue Product AG52 (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$	$	$
Costs:
Variable cost of goods sold
Variable selling expenses
Fixed costs
Income (Loss)	$	$	$

b. Determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2).

Expert Solution

Answer a.

Differential Analysis
Continue Product AG52 (Alt. 1) or Discontinue Product AG52 (Alt. 2)
October 7
	Continue Product AG52 (Alternative 1)	Discontinue Product AG52 (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	195,600.00	-	(195,600.00)
Costs:
Variable cost of goods sold	114,200.00	-	114,200.00
Variable selling expenses	31,600.00	-	31,600.00
Fixed costs	58,100.00	58,100.00	-
Income (Loss)	(8,300.00)	(58,100.00)	(49,800.00)


Answer b.

Product AG52 should be continued.
If Discountinued the Loss will be increased by $49,800.

ekkarill92 answered 7 months ago

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