CTA 8: Short Term & Capital Investment Decisions Cris Bonser, majority stockholder and president of Sudsy Soap Co., is working with her top managers on future plans for the company. As the company's managerial accountant, you've been asked to analyze the following situations and make recommendations to the management team. 2 The division manager of Division B received the following operating income data for the past year: Division B of Sudsy Soap Co. Income Statement For the Year Ended December 31, 2018 Product Line T205 B179 Net Sales Revenue $ 310,000 $ 360,000 $ Total 670,000 Cost of Goods Sold: Variable 31,000 44,000 75,000 Fixed 275,000 67,000 342,000 Total Cost of Goods Sold 306,000 111,000 417,000 Gross Profit 4,000 249,000 253,000 Selling & Admin Expenses: Variable 68,000 80,000 148,000 Fixed 47,000 27,000 74,000 Total Selling & Admin Expenses Operating Income (loss) 115,000 107,000 222,000 $ (111,000) $ 142,000 $ 31,000 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 $75,000 and decrease fixed selling and administrative expenses by $10,000. a. b. Prepare a differential analysis to show whether Division B should drop the T205 product line. What is your recommendation to the manager of Division B?