ASIA 329 Lecture 3: Lecture notes3
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The condensed product-line income statement for Dish Nâ DatCompany for the month of March is as follows:
Dish Nâ Dat Company |
Product-Line Income Statement |
For the Month Ended March 31, 2016 |
1 | Bowls | Plates | Cups | |
2 | Sales | $70,960.00 | $105,450.00 | $31,760.00 |
3 | Cost of goods sold | 32,990.00 | 42,680.00 | 16,710.00 |
4 | Gross profit | $37,970.00 | $62,770.00 | $15,050.00 |
5 | Selling and administrative expenses | 27,350.00 | 42,530.00 | 16,670.00 |
6 | Income from operations | $10,620.00 | $20,240.00 | $(1,620.00) |
Fixed costs are 30% of the cost of goods sold and 50% of theselling and administrative expenses. Dish Nâ Dat assumes that fixedcosts would not be materially affected if the Cups line werediscontinued.
Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A. | Prepare a differential analysisdated March 31, 2016, to determine if Cups should be continued(Alternative 1) or discontinued (Alternative 2). Refer to the listsof Labels and Amount Descriptions for the exact wording of theanswer choices for text entries. For those boxes in which you mustenter subtracted or negative numbers use a minus sign. If there isno amount or an amount is zero, enter "0". A colon (:) willautomatically appear if required. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. | Should the Cups line be retained? Explain
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