Reference no: EM132667792

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. a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J.

Question 1: Gooble Company Proposal to Discontinue Product J February 8, 20XX Differential revenue from annual sales of product: Revenue from sales $_______

Question 2: Differential cost of annual sales of product: Variable cost of goods sold $____

Question 3: Variable operating expenses $_____

Question 4: Annual differential income from sales of Product J