Business, 22.04.2021 15:50, keyonnaallen2004
A condensed income statement by product line for Healthy Beverage Inc. indicated the following for Fruit Cola for the past year:
Sales $12,750,000
Cost of goods sold 8,500,000
Gross profit $ 4,250,000
Operating expenses 6,000,000
Loss from operations $ (1,750,000)
It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Fruit Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
A. Prepare a differential analysis dated January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2).
B. Should Fruit Cola be retained? Explain.
Answers: 1
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A condensed income statement by product line for Healthy Beverage Inc. indicated the following for F...
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