The division manager of Division B received the following operating income data for the past year:

The manager of the division is surprised that the T205 product line is not profitable. The division accountant estimates that dropping the T205 product line will decrease fixed cost of goods sold by $83,000 and decrease fixed selling and administrative expenses by $9,000.

a.Prepare a differential analysis to show whether Division B should drop the T205 product line.

b.What is your recommendation to the manager of Division B?