Accounting For Management
For the three cases that follow, prepare a differential analysis.
• Case A (Discontinue a Product): Product K has revenue of $65,000, variable cost of goods sold of $50,000, variable selling expenses of $12,000, and fixed costs of $25,000, creating a loss from operations of $(22,000).
o Required: Prepare a differential analysis dated February 22 to determine whether to continue Product K (Alternative 1) or discontinue Product K (Alternative 2), assuming fixed costs are unaffected by the decision.
• Case B (Make versus Buy): A company manufactures a component of a product for $80 per unit, including fixed costs of $25 per unit. The component could be purchased from an outside supplier for $60 per unit, plus $5 per unit freight.
o Required: Prepare a differential analysis dated November 2 to determine whether the company should make (Alternative 1) or buy (Alternative 2), assuming fixed costs are unaffected by the decision.
• Case C (Sell or Process Further): Product T is produced for $2.50 per gallon. Product T can be sold without additional processing for $3.50 per gallon or processed further into Product V at an additional total cost of $0.70 per gallon. Product V can be sold for $4.00 per gallon.
o Required: Prepare a differential analysis dated April 8 to determine whether to sell Product T (Alternative 1) or process it further into Product V (Alternative 2).
Requirement:
1. Download the attachment.
2. Fill in your answer in the yellow boxes.
3. Upload this attachment when it is complete.
Case A (Discontinue a Product): (2 points)
Continue Product K
(Alt. 1) Discontinue Product K
(Alt. 2) Differential Effects
(Alt. 2)
Revenues
Costs:
Variable
Fixed
Profit (loss)
Here is the partial answer. You have to finish the rest.
Case B (Make vs. Buy): (2 points)
Make Component
(Alt. 1) Buy Component
(Alt. 2) Differential Effects
(Alt. 2)
Unit costs:
Purchase price
Freight
Variable costs
Fixed factory
overhead
Total unit costs
Here is the partial answer. You have to finish the rest.
Case C (Sell or Process Further): (1 point)
Sell Product T
(Alt. 1) Process Further
Product V
(Alt. 2) Differential Effects
(Alt. 2)
Revenues
Costs, per unit
protection is sought is useful or affects the cost or the quality of the article, such that granting trademark protection to the feature would put competitors at a significant disadvantage, the feature is not entitled to trademark protection. For example, a court held that the colour black when used on outboard boat motors serves a functional purpose, since the colour black is compatible with all other boat colours and also because the colour black makes the motor appear smaller. The first successful case of colour trademark was in the US. In Qualitex Co. v Jacobson Products Company, Inc. the petitioner company had been using a special shade of green-gold for their dry cleaning press pads since the 1950s. In 1989, Jacobson Products Co. started using a very similar shade of green-gold on its own press pads. Qualitex Co. got it’s shade of green-gold trademarked and also sued Jacobson for infringement. Another issue faced by colour marks is the possibility of there being litigation over shades of the same colour. A solution to this problem is designation of a colour using an internationally recognised identification code like Pantone as such codes are deemed to be precise and stable. The Pantone is a commercial system that designates specific shades numerically and categorises over thousand such shades by unique codes. Tiffany and Co.’s unique shade of blue ‘Tiffany Blue’ has been a registered trademark since 1998 and also has its own custom Pantone number – 1837, the year the company was founded. T-Mobile’s colour ‘Magenta’, Mattel’s ‘Barbie Pink’, UPS’s ‘Pullman Brown’ are some more examples of colour marks. India is yet to set precedence as far as colour marks are concerned.