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Differential Analysis #2 - The Gathering Sound, Ltd. The Gathering Sound, Ltd. has three divisions for selling music: Cassette, Vinyl, and CD. The divisions have

Differential Analysis #2 - The Gathering Sound, Ltd.

The Gathering Sound, Ltd. has three divisions for selling music: Cassette, Vinyl, and CD. The divisions have the following revenues and expenses for June 2022:

Cassette

Vinyl

CD

Revenues

$82,000

$430,000

$299,000

Variable Costs

$60,400

$173,800

$155,000

Fixed Costs:

Advertising

$4,000

$10,000

$15,000

Division manager's salary

$36,000

$38,000

$40,000

Other

$35,000

$91,300

$52,000

TOTAL

($53,400)

$116,900

$37,000

The management of The Gathering Sound is considering the elimination of the Cassette Division. If the Cassette Division were eliminated, assume that all variable costs, Advertising costs, and the Division manager's salary could all be avoided. However, the 'Other' fixed costs are unavoidable and would be unaffected by the decision to drop the Cassette line.

Calculate the effect on The Gathering Sound's profits as a whole if the Cassette line were to be eliminated. Enter your answer as a positive number if the effect is an increase in profits, and enter your answer as a negative number if the effect is a decrease in profits. Please enter your answer in whole dollars and include only numerals (i.e., do not include a $).

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