## Answers

**Solution:**

Differential Analysis - Sale Alpha (90000 Units), Beta (70000 Units)(Alt 1) or Discontinue Beta & Sale Alpha (104000 Units) (Alt 2) | |||||

Particulars | Sale Alpha (90000 Units), Beta (70000 Units)(Alt 1) | Discontinue Beta & Sale Alpha (104000 Units) (Alt 2) | Differential effect on income (Alt 2) | ||

Details | Amount | Details | Amount | ||

Revenue | (90000*$170) + (70000*$130) | $2,44,00,000.00 | 104000*$170 | $1,76,80,000.00 | -$67,20,000.00 |

Costs: | |||||

Direct Material | (90000*$30) + (70000*$18) | $39,60,000.00 | 104000*$30 | $31,20,000.00 | $8,40,000.00 |

Direct Labor | (90000*$30) + (70000*$25) | $44,50,000.00 | 104000*$30 | $31,20,000.00 | $13,30,000.00 |

Variable manufacturing Overhead | (90000*$20) + (70000*$15) | $28,50,000.00 | 104000*$20 | $20,80,000.00 | $7,70,000.00 |

Variable Selling Expenses | (90000*$22) + (70000*$18) | $32,40,000.00 | 104000*$22 | $22,88,000.00 | $9,52,000.00 |

Traceable Fixed manufacturing overhead | (116000*$26) + (116000*$28) | $62,64,000.00 | 116000*$26 | $30,16,000.00 | $32,48,000.00 |

Common fixed expenses | (116000*$25) + (116000*$20) | $52,20,000.00 | (116000*$25) + (116000*$20) | $52,20,000.00 | $0.00 |

Income / (Loss) | -$15,84,000.00 | -$11,64,000.00 | $4,20,000.00 |

Financial advantage = $420,000

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