FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Discontinue a Segment
Product Omega has revenue of $195,000, variable cost of goods sold of $113,900, variable selling expenses of $33,600, and fixed costs of $61,100, creating an operating loss of $(13,600).
a. Prepare a differential analysis as of January 15 to determine if Product Omega should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount
"0". If required, use a minus sign to indicate a loss.
Line Item Description
Revenues
Costs:
Differential Analysis
Continue (Alt. 1) or Discontinue (Alt. 2) Product Omega
January 15
Variable cost of goods sold
Variable selling and admin. expenses
Fixed costs
Profit (loss)
Continue Discontinue
Product Omega Product Omega
(Alternative 1) (Alternative 2) (Alternative 2)
0 0000
Differential
Effects
b. Determine if Product Omega should be continued (Alternative 1) or discontinued (Alternative 2).
zero, enter
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Transcribed Image Text:Discontinue a Segment Product Omega has revenue of $195,000, variable cost of goods sold of $113,900, variable selling expenses of $33,600, and fixed costs of $61,100, creating an operating loss of $(13,600). a. Prepare a differential analysis as of January 15 to determine if Product Omega should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount "0". If required, use a minus sign to indicate a loss. Line Item Description Revenues Costs: Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Product Omega January 15 Variable cost of goods sold Variable selling and admin. expenses Fixed costs Profit (loss) Continue Discontinue Product Omega Product Omega (Alternative 1) (Alternative 2) (Alternative 2) 0 0000 Differential Effects b. Determine if Product Omega should be continued (Alternative 1) or discontinued (Alternative 2). zero, enter
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