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 1 year ago

How do you find variable cost of goods sold and variable selling and administrative expenses for...

How do you find variable cost of goods sold and variable selling and administrative expenses for both months in the income statement in Required 2? Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 11 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 21 Fixed costs per month: Fixed manufacturing overhead $ 120,000 Fixed selling and administrative...

A company has revenues of $450,000, cost of goods sold of $250,000, and operating expenses of...

A company has revenues of $450,000, cost of goods sold of $250,000, and operating expenses of $150,000. Its average current assets are $200,000 of which $75,000 is inventory and $20,000 are prepaid items. Of its liquid assets, 30 percent is cash and the remainder is accounts receivable. Its average total assets are $500,000 and its average total owners’ equity is $400,000. Seventy-five percent of its liabilities are current. Of the current liabilities, 80 percent is accounts payable. What are the...

Raines Umbrella Corp. had sales of $608,674. Cost of goods sold, administrative and selling expenses, and...

Raines Umbrella Corp. had sales of $608,674. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $547,602, $89,764, and $80,449, respectively. In addition, the company had an interest expense of $85,353 and a tax rate of 31 percent. (Ignore any tax loss carryback or carryforward provisions. This means that if the company does not have any taxable income, they do not pay any tax.) Suppose Raines Umbrella Corp. paid out $52,441 in cash dividends. If spending on...

Finney Company's condensed income statement is presented below: revenues $1,000,000 expenses cost of goods sold $500,000...

Finney Company's condensed income statement is presented below: revenues $1,000,000 expenses cost of goods sold $500,000 operating and administrative expenses $300,000 Depreciation expense $60,000 $860,000 Income before taxes $140,000 income tax expense $29,400 net income $110,600 Earnings per share (100,000) $1.11 The following data is compiled relative to Finney's operating Segments: Percent identified with Segment hotels grains Candy revenues 42% 50% 8% cost of goods sold 48% 49% 3% operating and administrative expense 35% 50% 15% depreciation expense 46% 42%...

Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts...

Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts receivable $5,150,000 Other current assets $4,150,000 Fixed assets $7,150,000 a) What is the Net Profit Margin in PERCENT % (rounded to two decimal places)? b) What is the Asset Turnover rounded to two decimal places? c) What is the Return on Assets in PERCENT % (rounded to two decimal places)? d) What is the Size of the Total Assets used by the firm?

During 2019,Rainbow Umbrella Corp. had sales of $860,000. Cost of goods sold, administrative and selling expenses,...

During 2019,Rainbow Umbrella Corp. had sales of $860,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $680,000, $85,000, and $180,000, respectively. In addition, the company had an interest expense of $55,000 and a tax rate of 21 percent. (Assume that interest is fully deductible.) Suppose the company paid out $65,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation expense of $10,000, and interest expense of $30,000. What is the net income for the firm using the following tax schedule? Taxable Income Tax Rate $ 1-50,000 10% $ 50,001-75,000 20% $ 75,001-100,000 30% $100,001-335,000 40% $335,001 + 50%

Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of...

Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of $198,000, average invested assets of $4,400,000, and a hurdle rate of 11 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin answer to the nearest whole percentage, (i.e., 0.1234 should be entered as 12%). Round your Investment Turnover answers to 4 decimal places.) Please calculate...

Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of...

Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of $50,000, average invested assets of $2,100,000, and a hurdle rate of 9 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold...

Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of...

Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of $40,000, average invested assets of $2,250,000, and a hurdle rate of 11 percent. 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) 2....

Question