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CH11 CH12 CH13 CH14 CH15

5E ** <javascript:void(0)> * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 1A 1CDQ 1E 1P 2A 2CDQ 2E 2P 3A 3CDQ 3E 3P 4A 4CDQ 4E 4P 5A 5CDQ 5E 5P 6CDQ 6E 6P 7CDQ 7E 8CDQ 8E 9CDQ 9E 10CDQ 10E 11CDQ 11E 12CDQ 12E 13CDQ 13E 14CDQ 14E 15CDQ 15E 16E 17E 18E 19E 20E 21E 22E

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FS show all steps CH12 5P CH12 5CDQ * Step 1 of 1 The differential analysis report of S Mates Inc if the children shoe line is discontinued stands as follows_*S Mates Inc*_ _*Differential Analysis Report*_ s

Children's Shoes

Men's Shoes

Women's Shoes

Total

Children's shoe discontinue Sale

$ 170,000

$ 300,000

$ 500,000

$ 970,000

$ 800,000 Cost of goods sold

Variable costs

$ 100,000

$ 150,000

$ 220,000

$ 470,000

$ 370,000 fixed costs

$ 50,000

$ 60,000

$ 120,000

$ 230,000

$ 230,000 Total cost of goods sold

$ 150,000

$ 210,000

$ 340,000

$ 700,000

$ 600,000 Gross Profit

$ 20,000

$ 90,000

$ 160,000

$ 270,000

$ 200,000 Selling and Admin Expenses

Variable selling and Admin expenses

$ 30,000

$ 45,000

$ 95,000

$ 170,000

$ 140,000 Fixed selling and admin expenses

$ 18,000

$ 20,000

$ 25,000

$ 63,000

$ 63,000 Total selling and admin expenses

$ 48,000

$ 65,000

$ 120,000

$ 233,000

$ 203,000 Income from operation

$ (28,000)

$ 25,000

$ 40,000

$ 37,000

$ (3,000)

The income will become -$3000 instead of an increment by $28,000. This is because there will be no change in fixed income. Only variable cost will change/decrease. /_*Decision:*_/ The manager s folly lies in considering fixed cost as relevant cost for decision making purpose. Thus his decision is erroneous. If the children s shoe are discontinued the same would result in a loss of $3000. Provide feedback (0) o Submit Rate this solution 0 Stars(0 users) ABOUT CHEGG * * * * * * * * * Media Center <http://www.chegg.com/mediacenter/> Chegg For Good <http://www.chegg.com/cheggforgood/> Brand Partnerships <http://www.chegg.com/brandpartner/> Privacy Policy <http://www.chegg.com/privacypolicy/> Your CA Privacy Rights <http://www.chegg.com/privacypolicy/#california> Terms of Use <http://www.chegg.com/termsofuse/> General Policies <http://www.chegg.com/generalpolicies/> Intellectual Property Rights <http://www.chegg.com/copyright/> Investor Relations <http://investor.chegg.com/> RESOURCES Site Map <http://www.chegg.com/sitemap> Mobile <http://www.chegg.com/mobile> Publishers <http://www.chegg.com/publishers> Join Our Affiliate Program <http://www.chegg.com/affiliatesignuppage/> Advertising Choices <http://preferences-mgr.truste.com/?pid=chegg01&aid=chegg_pub02&type=cheggdi rect> PUBLISHER PAGES * * * * * McGraw-Hill <http://www.chegg.com/mcgraw-hill> Cengage <http://www.chegg.com/cengage> Pearson <http://www.chegg.com/pearson> Wiley <http://www.chegg.com/wiley> Elsevier <http://www.chegg.com/elsevier> HELPFUL LINKS * * * * * * * * Return Your Books <http://www.chegg.com/my/account/returnbooks> Rent Textbooks <http://www.chegg.com/textbooks> eTextbooks <http://www.chegg.com/etextbooks> Used Textbooks <http://www.chegg.com/used-textbooks> Cheap Textbooks <http://www.chegg.com/cheap-textbooks> College Textbooks <http://www.chegg.com/college-textbooks> Sell Textbooks <http://www.chegg.com/sell-textbooks> Chegg Study Help <http://www.chegg.com/homework-help/> * * * * *

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