Discontinue a Segment Product A has revenue of $195,200, variable cost of goods

Question

Discontinue a Segment Product A has revenue of $195,200, variable cost of goods sold of $114,000, variable selling expenses of $58,000, creating a loss from operations of $10,600. Prepare a differential analysis as of September 12, to determine if Product A should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter zero "o. u $33,800, and fixed costs of loss. Differential Analysis Continue Product A (Alt. 1) or Discontinue Product A (Alt. 2 12 Continue Product A (Alternative 1) Discontinue Product A (Alternative 2) Differential Effect on Income (Alternative 2) Revenues 195.200 Costs: Variable cost of goods sold 114,000 Variable selling and admin.33.800 expenses 58.000 $8.000 Fixed costs 58.000 Income (Loss) 10,600 v 47,400 Feedback Check l

Explanation / Answer

DIFFERENTIAL ANALYSIS: Continue Discontinue Differential Effect Revenues 195200 0 -195,200 Cost: Variable cost of goods 114000 0 114,000 Variable selling and adin 33800 0 33,800 Fixed cost 58000 58,000 0 Income/(Loss) -10600 -58,000.00 -47,400.00 Hence, Product A shall not discontinue

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