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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 $260,000, 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. If an amount box does not require an entry, leave it blank or enter "0".

Differential Analysis Proposal to Discontinue Product J February 8

	Continue Product J	Discontinue Product J	Differential Effect on Income
Fixed operating expensesRevenueSupplies expensesVariable cost of goods soldVariable operating expensesRevenue	$Revenue	$Revenue	$Revenue
Costs:
Advertising expensesCommission expense on saleFixed operating expensesRevenue from salesVariable cost of goods sold	$- Select -	$- Select -	$- Select -
Commission expense on saleFixed cost of goods soldRevenue from salesSupplies expensesUtilities expense	- Select -	- Select -	- Select -
Commission expense on saleFixed operating expensesRevenue from salesUtilities expenseVariable operating expenses	- Select -	- Select -	- Select -
Commission expense on saleFixed operating expensesRevenue from salesSupplies expensesUtilities expense	- Select -	- Select -	- Select -
Total costs	$fill in the blank 21	$fill in the blank 22	$fill in the blank 23
Income (loss)	$fill in the blank 24	$fill in the blank 25	$fill in the blank 26

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