Differential Analysis Report for a Discontinued Product

The condensed product-line income statement for Suffolk China Ware Company is as follows:

SUFFOLK CHINA WARE COMPANY Product-Line Income Statement
	Bowls			Plates			Cups
Sales	$653,000			$887,000			$279,000
Cost of goods sold	(256,000)			(325,000)			(156,000)
Gross profit	$397,000			$562,000			$123,000
Selling and administrative expenses	(301,000)			(344,000)			(148,000)
Operating income (loss)	$96,000			$218,000			$(25,000)

Fixed costs are 38% of the cost of goods sold and 17% of the selling and administrative expenses. Suffolk China Ware assumes that fixed costs would not be significantly affected if the Cups line were discontinued.

a. Prepare a differential analysis report for all three products.

SUFFOLK CHINA WARE COMPANY
Product Income
Differential Analysis Report
	Bowls	Plates	Cups
Differential revenue from monthly sales:
	$fill in the blank	$fill in the blank	$fill in the blank
Differential costs of monthly sales:
	$fill in the blank	$fill in the blank	$fill in the blank
	fill in the blank	fill in the blank	fill in the blank
	$fill in the blank	$fill in the blank	$fill in the blank
Monthly differential income from sales	$fill in the blank	$fill in the blank	$fill in the blank

b. Which of the following statements about the Cups line is true?