Follow example exercise 24-2 for continue and discontinue

Assignment Help Accounting Basics

Reference no: EM13576935

The condensed product-line income statement for Suffolk China Ware Company for the month of December is as follows:

Suffolk China Ware Company Product-Line Income Statement For the Month Ended December 31, 2014
	Bowls	Plates	Cups
Sales	$64,700	$88,800	$26,900
Cost of goods sold	26,800	32,400	15,800
Gross profit	$37,900	$56,400	$11,100
Selling and administrative expenses	28,600	34,000	15,900
Income from operations	$9,300	$22,400	$(4,800)

Fixed costs are 12% of the cost of goods sold and 40% of the selling and administrative expenses. Suffolk China Ware assumes that fixed costs would not be materially affected if the Cups line were discontinued.

Hide

a. Prepare a differential analysis dated December 31, 2014, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0".

Differential Analysis

Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2)

December 31, 2014

Continue Cups (Alternative 1)

Discontinue Cups (Alternative 2)

Differential Effect on Income (Alternative 2)

Revenues

Costs:

Variable cost of goods sold

Variable selling and admin. expenses

Fixed costs

Income (Loss)

Hide Feedback

Partially Correct

Check My Work Feedback

Follow Example Exercise 24-2. For continue and discontinue alternatives subtract the costs from the revenue. Use percentages to separate variable from fixed costs. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 2 from alternative 1.

Learning Objective 1.

b. Should the Cups line be retained?
SelectYesNoCorrect 1 of Item

Reference no: EM13576935

Questions Cloud

Charter corporation which began business in 2013 : charter corporation which began business in 2013 appropriately uses the installment sales method of accounting for its

On july 1 2014 fleming company sells machinery for 120000 : 1. stine company purchased machinery with a list price of 64000. they were given a 10 discount by the manufacturer.

I will focus more on the accounting and management of : in this will focus more on the accounting and management of receivables because it is a more difficult topic. accounts

A company is considering replacing an old piece of : a company is considering replacing an old piece of machinery which cost 597500 and has 347500 of accumulated

Follow example exercise 24-2 for continue and discontinue : the condensed product-line income statement for suffolk china ware company for the month of december is as

A random sample of size 10 is chosen from a population of : a random sample of size 10 is chosen from a population of 100 without replacement if a and b are two indiviuals among

Assume the total effective tax rate on all items is : the following balances were taken from the books of parnevik corp. on december 31 2012.interest revenue 88800

Suppose a company has five different capital budgeting : suppose a company has five different capital budgeting projects from which to choose but has constrained funds and

What would be the account balance in the service revenue : what would be the account balance in the service revenue account after the following transactions assuming a zero

User Account

All Pages