Product J Is One of the Many Products Manufactured and Sold

question 144

Essay

Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net loss for Product J of $12,250. This net loss resulted from sales of $275,000, 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. 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.
Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J.

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Definitions:

Pastry

A type of baked goods typically made from ingredients like flour, water, and shortening that can be sweet or savory.

Streusel Topping

A crumbly topping made from a mixture of butter, flour, sugar, and often nuts or spices, used on baked goods.

Chronological

Describes something arranged in the order of time, from the earliest to the latest.

Blogs

Regularly updated websites or web pages, typically run by an individual or small group, that are written in an informal or conversational style.