Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc indicated the following for Vim Cola for the past year: Sales Cost of goods sold Gross profit $236,400 (110,000) $126,400 Operating expenses (145,000) Operating loss $(18,600) It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 18% of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated November 2 to determine whether Vim Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "01. af required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Vim Cola November 2 Line Item Description Revenues Costs: Variable cost of goods sold Vanable operating expenses Fixed costs Profit (loss) Continue Discontinue Differential Vim Cola Vim Cola Effects (Alternative 1) (Alternative 2) (Alternative 2) b. Should Vim Cola be retained? H BAUER

Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc indicated the following for Vim Cola for the past year: Sales Cost of goods sold Gross profit $236,400 (110,000) $126,400 Operating expenses (145,000) Operating loss $(18,600) It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 18% of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated November 2 to determine whether Vim Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "01. af required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Vim Cola November 2 Line Item Description Revenues Costs: Variable cost of goods sold Vanable operating expenses Fixed costs Profit (loss) Continue Discontinue Differential Vim Cola Vim Cola Effects (Alternative 1) (Alternative 2) (Alternative 2) b. Should Vim Cola be retained? H BAUER

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3E: Differential analysis for a discontinued product A condensed income statement by product line for...

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Cost of Goods Manufactured, Income Statement W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for 400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips accounting records provide the following information: Required: 1. Prepare a statement of cost of goods manufactured. 2. Compute the average cost of producing one unit of product in the year. 3. Prepare an income statement for external users.
Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc. indicated the following for Vim Cola for the past year: Sales Cost of goods sold $233,400 (111,000) Gross profit Operating expenses Operating loss $122,400 (143,000) $(20,600) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 18% of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated November 2 to determine whether Vim Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Vim Cola Line Item Description November 2 Continue Vim Cola Discontinue Vim Cola Differential Effects Revenues Costs: Variable cost of…
Differential Analysis Report for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for King Cola for the past year: Sales Cost of goods sold $235,900 (109,000) Gross profit $126,900 Operating expenses (144,000) Operating loss $(17,100) It is estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 18% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. < a. Prepare a differential analysis report for the proposed discontinuance of King Cola. Crown Beverage Inc. Proposal to Discontinue King Cola Differential Analysis Report Differential revenue from annual sales of King Cola: Revenue from sales Differential cost of annual sales of King Cola: Variable cost of goods sold Variable operating expenses ? 100 3_E beg
Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc. indicated the following for Vim Cola for the past year: Sales $234,600 Cost of goods sold (111,000) Gross profit $123,600 (144,000) $(20,400) Operating expenses Operating loss It is estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated November 2 to determine whether Viem Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Vim Colo November 2 Line Item Description Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs Profit…
Differential Analysis for a Discontinued Product A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year: $232,500 (109,000) $123,500 (143,000) $(19,500) Sales Cost of goods sold Gross profit Operating expenses Operating loss It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 22% of the operating expenses are fixed. Because Mango Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Mango Cola February 29 Continue Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs Profit (Loss)…
A condensed income statement by product line for Crown Beverage Inc. indicated the following for King Cola for the past year: Sales $236,100 Cost of goods sold 112,000 Gross profit $124,100 Operating expenses 142,000 Loss from operations $(17,900) It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. Question Content Area a. Prepare a differential analysis, dated March 3, to determine whether King Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential AnalysisContinue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2)January 21 Continue KingCola (Alternative 1) Discontinue KingCola (Alternative 2) Differential Effecton Income(Alternative 2)…
Differential Analysis for a Discontinued Product A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year: Sales $238,000 Cost of goods sold (109,000) Gross profit $129,000 Operating expenses (142,000) Operating loss $(13,000) It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Because Mango Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Mango Cola February 29 ContinueMango Cola(Alternative 1) DiscontinueMango Cola(Alternative 2)…
Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc. indicated the following for Vim Cola for the past year: Line Item Description Amount Sales $237,700 Cost of goods sold (110,000) Gross profit $127,700 Operating expenses (144,000) Operating loss $(16,300) It is estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. Question Content Area a. Prepare a differential analysis dated November 2 to determine whether Vim Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential AnalysisContinue (Alt. 1) or Discontinue (Alt. 2) Vim ColaNovember 2 Line Item Description ContinueVim…
A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year: Sales $236,800 Cost of goods sold 109,000 Gross profit $127,800 Operating expenses 145,000 Loss from operations $(17,200) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Continue RoyalCola (Alternative 1) Discontinue RoyalCola (Alternative 2) Differential Effecton Income(Alternative 2)…
A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year: Sales $235,100 Cost of goods sold 112,000 Gross profit $123,100 Operating expenses 145,000 Loss from operations $(21,900) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether to Continue King Cola (Alternative 1) or Discontinue King Cola (Alternative 2). If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential AnalysisContinue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2)March 3 Continue KingCola (Alternative 1) Discontinue KingCola (Alternative 2) Differential…
A condensed income statement by product line for Crown Beverage Inc. indicated the following for King Cola for the past year: Sales $232,500 Cost of goods sold 108,000 Gross profit $124,500 Operating expenses 146,000 Loss from operations $(21,500) It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 22% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether to Continue King Cola (Alternative 1) or Discontinue King Cola (Alternative 2). If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2) March 3 Continue King Discontinue King Differential Effects Cola (Alternative 1) Cola (Alternative 2) (Alternative 2)…
A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year: Sales $233,300 Cost of goods sold 111,000 Gross profit $122,300 Operating expenses 145,000 Loss from operations $(22,700) It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Continue RoyalCola (Alternative 1) Discontinue RoyalCola (Alternative 2) Differential Effecton Income(Alternative 2)…