Dish N Dat Company

Production-Line Income Statement

For the Month Ended March 31, 2016

Bowls Plated Cups

Sale $71,000 $105,700 $31,300

Cost of goods sold 32,600 42,300 16,800

Gross profit $38,400 $63,400 $14,500

Selling and administrative expenses ... 27,400 42,800 16,700

Income for operation . $11,000 $20,600 $ (2,200)

Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expense. Dis N Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued.

Prepare a different analysis dated March 31, 2016, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2).

Should the Cups line be retained? Explain.