Differential Analysis Report for a Discontinued Product

The condensed product-line income statement for Porcelain Tableware Company is as follows:

PORCELAIN TABLEWARE COMPANY Product-Line Income Statement
	Bowls			Plates			Cups
Sales	$658,000			$903,000			$272,000
Cost of goods sold	(271,000)			(335,000)			(154,000)
Gross profit	$387,000			$568,000			$118,000
Selling and administrative expenses	(289,000)			(344,000)			(144,000)
Operating income (loss)	$98,000			$224,000			$(26,000)

Fixed costs are 42% of the cost of goods sold and 16% of the selling and administrative expenses. Porcelain Tableware 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.

PORCELAIN TABLEWARE COMPANY
Product Income
Differential Analysis Report
	Bowls	Plates	Cups
Differential revenue from monthly sales:
Revenue from sales	$	$	$
Differential costs of monthly sales:
Variable cost of goods sold	$	$	$
Variable selling and administrative expenses
	$	$	$
Monthly differential income from sales	$	$	$