Product J Is One of the Many Products Manufactured and Sold

question 83

Essay

Product J is one of the many products manufactured and sold by Gooble Company.An income statement by product line for the past year indicated a net loss for Product J of $7,250.This net loss resulted from sales of $265,000, cost of goods sold of $186,500, and operating expenses of $85,750.It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed.If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year.However, because of the net loss, management is considering the elimination of the unprofitable endeavor.Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued.
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Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J.

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Definitions:

Inhibition

The psychological process that restrains or suppresses an impulse, desire, or behavior.

Obesity

A medical condition characterized by excess body fat accumulation, posing significant health risks.

Family Meals

Meals that are prepared and eaten together by members of the family, fostering bond and communication among them.

Screen Time

denotes the amount of time spent using devices with screens such as smartphones, computers, and televisions, often concerning health and wellbeing discussions.