the condensed product line income statement for country ceramics company for the cur 647813
The condensed product line income statement for Country Ceramics Company for the current year is as follows:
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Country Ceramics Company |
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Product Line Income Statement |
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For the Year Ended December 31, 2008 |
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Bowls |
Plates |
Cups |
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Sales |
$132,000 |
$108,000 |
$83,000 |
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Cost of goods sold |
71,000 |
55,000 |
49,000 |
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Gross profit |
$ 61,000 |
$ 53,000 |
$34,000 |
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Selling and administrative expenses |
35,000 |
24,000 |
38,000 |
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Income from operations |
$ 26,000 |
$ 29,000 |
$ (4,000) |
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Fixed costs are 15% of the cost of goods sold and 28% of the selling and administrative expenses. Country Ceramics assumes that fixed costs would not be materially affected if the Cups line were discontinued.
a. Prepare a differential analysis report for all three products for 2008.
b. Should the Cups line be retained? Explain.