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2. The division manager of Division B received the following operating income data for the past year: : (Click the icon to view the Division
2. The division manager of Division B received the following operating income data for the past year: : (Click the icon to view the Division B operating income data.) 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 $76,000 and decrease fixed selling and administrative expenses by $8,000. 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? Data Table Division B of Davidson, Inc. Income Statement For the Year Ended December 31, 2018 Product Line T205 B179 Total 360,000 $ 370,000 $ 730,000 Net Sales Revenue Cost of Goods Sold: Variable Fixed 40,000 260,000 300,000 60,000 41,000 63,000 104,000 81,000 323,000 404,000 266,000 326,000 Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses Variable 70.000 45,000 Fixed 79,000 149,000 28,000 73,000 107,000 222,000 159,000 $ 104,000 Total Selling and Administrative Expenses 115,000 (55,000) $ Operating Income (Loss) Print Done
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