1. 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
   	Bowls			Plates			Cups
   Sales	$66,000			$90,400			$26,000
   Cost of goods sold	26,000			32,300			14,900
   Gross profit	$40,000			$58,100			$11,100
   Selling and administrative expenses	29,400			35,600			15,200
   Income from operations	$10,600			$22,500			$(4,100)

   Fixed costs are 12% of the cost of goods sold and 42% 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
   	Continue Cups (Alternative 1)	Discontinue Cups (Alternative 2)	Differential Effect (Alternative 2)
   Revenues	$fill in the blank d7e720007fbffa0_1	$fill in the blank d7e720007fbffa0_2	$fill in the blank d7e720007fbffa0_3
   Costs:
   Variable cost of goods sold	fill in the blank d7e720007fbffa0_4	fill in the blank d7e720007fbffa0_5	fill in the blank d7e720007fbffa0_6
   Variable selling and admin. expenses	fill in the blank d7e720007fbffa0_7	fill in the blank d7e720007fbffa0_8	fill in the blank d7e720007fbffa0_9
   Fixed costs	fill in the blank d7e720007fbffa0_10	fill in the blank d7e720007fbffa0_11	fill in the blank d7e720007fbffa0_12
   Profit (loss)	$fill in the blank d7e720007fbffa0_13	$fill in the blank d7e720007fbffa0_14	$fill in the blank d7e720007fbffa0_15

   b. Should the Cups line be retained? YES OR NO.

   As indicated by the differential analysis in part (a), the income will by $_____ if the Cups line is discontinued.