Differential Analysis for a Discontinued Product

The condensed product$-$line income statement for Porcelain Tableware Company for the month of May is as follows:

Porcelain Tableware Company

Product$-$Line Income Statement

For the Month Ended May $31$

Fixed costs are $15\%$ of the cost of goods sold and $39\%$ of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be materially

affected if the Cups line were discontinued.

a$.$ Prepare a differential analysis dated May $31$ to determine whether to Continue Cups $($Alternative $1)$ or Discontinue Cups $($Alternative $2).$ If an amount is zero, enter

$"0".$ For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis

Continue Cups $($Alt$.1)$ or Discontinue Cups $($Alt$.2)$

For the Month Ended May $31$

b$.$ Should the Cups line be retained? Explain.

As indicated by the differential analysis in part $($a$),$ the income will

by :

if the Cups line is discontinued.