Prepare a differential analysis dated december
Prepare a differential analysis dated december Cost Accounting
The condensed product-line income statement for Porcelain Tableware Company for the month of December is as follows:
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Bowls |
Plants |
Cups |
| Sales |
$65,000 |
$89,400 |
$26,900 |
| Cost of Goods Sold |
26,300 |
32,800 |
14,800 |
| Gross Profit |
$38,700 |
$56,600 |
$12,100 |
| Selling and Admin Expenses |
29,400 |
34,900 |
15,400 |
| Income from Operations |
$9,300 |
$21,700 |
$(3,300) |
Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be materially affected if the Cups line were discontinued.
Prepare a differential analysis dated December 31, 2012, to determine if cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero “0”.
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| Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) |
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| Continue Cups (Alternative 1) |
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| Discontinue Cups (Alternative 2) |
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| Differential Effect on Income (Alternative 2) |
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| Variable cost of goods sold |
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| Variable selling and admin. expenses |
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