Question

The condensed product-line income statement for Dish N’ DatCompany for the month of March is as follows:

Dish N’ 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 N’ 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

Labels

Cash flows from investingactivities

Costs

AmountDescriptions

Fixed costs

Gain on sale of investments

Income (loss)

Loss on sale of investments

Revenues

Total costs

Variable cost of goods sold

Variable selling and administrative expenses

A. Prepare a differential analysis dated March 31, 2016, todetermine if Cups should be continued (Alternative 1) ordiscontinued (Alternative 2). Refer to the lists of Labels andAmount Descriptions for the exact wording of the answer choices fortext entries. For those boxes in which you must enter subtracted ornegative numbers use a minus sign. If there is no amount or anamount is zero, enter "0". A colon (:) will automatically appear ifrequired.

Question not attempted.

Score: 0/89

Differential Analysis

Continue Cups (Alternative 1) or Discontinue Cups (Alternative2)

March 31, 2016

1		Continue Cups	Discontinue Cups	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
3
4
5
6
7
8

B. Should the Cups line be retained? Explain.

Yes

No

As indicated by the differential analysis in part (A), theincome will decrease by if the Cupsline is discontinued.