Question

eBook Show Me How Calculator Discontinue a segment Instructions Labels and Amount Descriptions Differential Analysis Final Question Instructions Product AG52 has revenues of 5748.000, variable cost of goods sold of $540,000 variable sing expenses of 500.000, and feed costs of $50.000, creating a loss from operations of 532.000 Required: 1. Prepare a as of October 7 to determine Product AG52 should be continued o discontinued Alternative 21 assuming fred costs are notected by the decision Refer to the lots of Label and Amount Descriptions for the exact wording of the answer choice for best entries. For those bores in which you must enter subtracted or negative numbers use there is no amount or an amount is zero, enter" Acolon) wit automatically appear required 2. Determine Product A52 should be continued (Alternative 1) or discontinued tomative 23 Check My work < Previous Next >

Answer 1

Answer:

	Continue Product AG 52	Discontinue Product AG 52	Differential Effect on Income
	(Alternative 1)	(Alternative 2)	(Alternative 2)
Revenues	748,000	0	-748,000
Costs:
Variable cost of goods sold	-640,000	0	640,000
Variable selling Expense	-90,000	0	90,000
Fixed Costs	-50,000	-50,000	0
Total Cost	-780,000	-50,000	730,000
Net Income	-32,000	-50,000	-18,000

Product AG 52 should be discontinued, as it would increase Net Loss by $18,000.