Question

Discontinue a Segment Product Tango has revenue of $193,300, variable cost of goods sold of $114,600, variable selling expenses of 533,800, and fixed costs of $59,000, creating an operating loss of $(14,100). a. Prepare a differential analysis as of February 13 to determine if Product Tango should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "O". If required, use a minus sign to indicate a loss. Differential Analysis Continue Product Tango (Alt. 1) or Discontinue Product Tango (Alt. 2) February 13 Continue Discontinue Differential Product Product Effects Tango Tango (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Profit (Loss) b. Determine if Product Tango should be continued (Alternative 1) or discontinued (Alternative 2).

Answer 1

Differential Analysis
	Continue Product (Alternative 1)	Discontinue Product (Alternative 2)	Differential Effect (Alternative 2)
Revenues	$193,300.00	$0.00	-$193,300.00
Costs:
Variable cost of goods sold	$114,600.00	$0.00	$114,600.00
Variable selling expenses	$33,800.00	$0.00	$33,800.00
Fixed costs	$59,000.00	$59,000.00	$0.00
Income (Loss)	-$14,100.00	-$59,000.00	-$44,900.00