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.

---

Definitions:

Boundary Lines

The defined borders that mark the edges of a property or jurisdiction.

Physical Improvements

Refers to enhancements or modifications made to a property or asset that increase its value or utility.

Insurance Law

A branch of law that deals with the regulation of insurance policies and claims.

Premium

The amount paid for insurance coverage or an additional cost for higher-quality services or products.