Acondensed income statement by product line for british beverage inc. indicated the following for king cola for the past year: sales $235,100 cost of goods sold (110,000) gross profit $125,100 operating expenses (142,000) operating loss $(16,900) it is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. since king cola is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. prepare a differential analysis report for the proposed discontinuance of king cola.
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Ответ:
Provided total expenses
Cost of goods sold = $110,000
Variable + Fixed
Provided 12% is fixed = $110,000 X 12% = $13,200
Variable = $110,000 - $13,200 = $96,800
Now in Operating Expenses
Total = $142,000
Fixed = $142,000 X 21% = $29,820
Variable = $142,000 - $29,820 = $112,180
Now if the product King Cola is discontinued then
All the variable cost can be avoided
In that case Net loss will be of Fixed cost
Total fixed cost = $13,200 +$29,820 = $43,020
Whereas current operating loss = $16,900
Now if the input and labor used for King Cola can be allocated to some other beneficial product which can further meet at least $43,020 - $16,900 = $26,120 profit from these additional inputs.
Else the company shall operate on king Cola as in case of operating with the same the loss is only of $16,900 whereas in case of non operation loss = $43,020
Ответ:
n urcute
Explanation: