The condensed product-line income statement for Dish N' Dat Company for the month of March is as follows:
Dish N' Dat Company
Product-Line Income Statement
For the Month Ended March 31
Bowls Plates Cups
Sales $71,000 $105,700 $31,300
Cost of goods sold 32,600 42,300 16,800
Gross profit $38,400 $63,400 $14,500
Selling and administrative expenses 27,400 42,800 16,700
Income from operations $11,000 $20,600 $(2,200)
Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expenses.
Dish N' Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued.
Required:
a. Prepare a differential analysis dated March 31, 2014, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero 0.