Product AG52 has revenues of $748,000, variable cost of goods sold of $640,000,

Question

Product AG52 has revenues of $748,000, variable cost of goods sold of $640,000, variable selling expenses of $90,000, and fixed costs of $50,000, creating a loss from operations of $32,000. 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.

Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Product AG52 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) $ $ $

Explanation / Answer

Continue Product AG52 (Alternative 1) Discontinue Product AG52 (Alternative 2) Differential Effect on Income (Alternative 2) Revenues 748000 0 -748000 Costs: Variable cost of goods sold 640000 0 640000 Variable selling expenses 90000 0 90000 Fixed costs 50000 50000 0 Income (Loss) -32000 -50000 -18000

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