Atlantic Soup Company is presently operating at 75 percent of capacity. Worried about the company's performance, the president is considering dropping its clam chowder line. If clam chowder is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows:

Required
Prepare a differential cost schedule like the one in Exhibit 4.8 to indicate whether Atlantic should drop the clam chowder productline.

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Product Sales Variable costs. Tomato Clam Chowder Chicken Noodle $32,600 $42,800 38,600 $10,600 4,200 6,000 1,800 $51,200 40,100 $11,100 7,100 --22,000 Contribution margin Fixed costs allocated to each product line .. 4,700 Operating profit (loss).. 5,00 $(1.800 4000