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 company’s 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 company’s total fixed costs would be reduced by 15 percent.

Segmented income statements appear as follows:

	Green Beans	Sweet Peas	Tomatoes
Sales	$ 81,500	$ 107,000	$ 128,000
Variable costs	57,200	100,300	104,300
Contribution margin	$ 24,300	$ 6,700	$ 23,700
Fixed costs allocated to each product line	9,780	12,840	15,360
Operating profit (loss)	$ 14,520	$ (6,140)	$ 8,340

Required:

a. Prepare a differential cost schedule.

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