Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the companys performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the companys total fixed costs would be reduced by 15 percent.

Segmented income statements appear as follows:

Green BeansSweet PeasTomatoesSales$ 89,000$ 129,500$ 150,700Variable costs60,200114,400119,300Contribution margin$ 28,800$ 15,100$ 31,400Fixed costs allocated to each product line12,78020,34030,360Operating profit (loss)$ 16,020$ (5,240)$ 1,040

Required:

a. Prepare a differential cost schedule.

b. Should Gilbert Canned Produce drop the sweet pea product line?