E25-13 Making dropping a product decisionsTop managers of Best Video are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision:Selling and AdministrativeTotal Fixed ExpensesOperating Income (Loss)Blu-ray DiscsDVD DiscsTotal$ (43,000)76,00017,000BEST VIDEOIncome StatementFor the Year Ended December 31, 2016$ 32,000127,00052,000$ (11,000)59,00075,000134,000203,00069,000Contribution MarginSales RevenueVariable CostsManufacturingFixed Costs:33,00090,000159,000150,000192,000240,000$ 123,000$ 309,000$ 432,000Total fixed costs will not change if the company stops selling DVDs.Requirements1. Prepare a differential analysis to show whether Best Video should drop the DVD product line.2. Will dropping DVDs add $43,000 to operating income? Explain.