Question: please help solve thank you Differential Analysis for a Discontinued Product A condensed income statement by product line for Healthy Beverage Inc. indicated the following

Differential Analysis for a Discontinued Product A condensed income statement by product line for Healthy Beverage Inc. indicated the following for Fruit Cola for the past year: Sales $233,100 108,000 Cost of goods sold Gross profe $125,100 Operating expenses 146,000 Loss from operations $(20,000) 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. Because Fruit Cols 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 January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate a loss Differential Analysis Continue Fruit Cola (Alt. 1) or Discontinue Fruit Cola (Alt. 2) January 5 Continue Fruit Cola (Alternative 1) Discontinue Frut Cols (Alternative 2) Differential Effect on Income (Alternative 2) 233,100 x X Revenues Costs: X Variable cost of goods sold 42960 X X X Variable operating expenses X x Fixed costs 1000 X 140,000 Loss from operations $(20,900) It is estimated that 12% of the cost of goods sold represents fored factory overhead costs and that 23% of the operating expenses are fixed. Because Fruit Cols 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 January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, unter "0". Use a minus sign to indicate a loss. Differential Analysis Continue Fruit Cola (Alt. 1) or Discontinue Fruit Cola (Alt. 2) January 5 Continue Fruit Cola (Alternative 1) Discontinue Friat Cola (Alternative 2) Differential Effect on Income (Alternative 2) 233,100 Revenues x Costs: Variable cost of goods sold -12.960 X X Variable operating expenses X x Fixed costs X X X x Income (Loss) b. Should Fruit Cola be retained? X x X X
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
