Lamothe Kitchen and Bath makes products for the home, which it sells through major retailers and remodeling (do it yourself, or DIY) outlets One product that has had varying success is a ceiling fan for the kitchen The fan comes in three sizes (36 Inch, 44 Inch, and 54 Inch), which are designed for various kitchen sizes and cooling requirements The chief financial officer (CFO) at Lamothe has been looking at the segmented income statement for the fan and is concerned about the results for the 36 inch model 36 Inch 44 Inch 54 Inch Revenues $ 374,100 $ 576,500 $ 354,300 Variable costs 232,600 286,680 164,500 Fixed costs allocated to products 148,230 226,464 139,806 Operating profit (loss) $ (6,730) $ 63,356 $ 49,994 If the 36 Inch model is 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 25 percent Required a Prepare a differential cost schedule to support your recommendation b Should Lamothe Kitchen and Bath should drop the 36 Inch model product line Prepare a differential cost schedule to support your recommendation (Select option increase or decrease , keeping Status Quo as the base Select none if there is no effect )

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Lamothe Kitchen and Bath makes products for the home, which it sells through major retailers and remodeling (do-it-yourself, or DIY) outlets. One product that has

Lamothe Kitchen and Bath makes products for the home, which it sells through major retailers and remodeling (do-it-yourself, or DIY) outlets. One product that has had varying success is a ceiling fan for the kitchen. The fan comes in three sizes (36-Inch, 44-Inch, and 54-Inch), which are designed for various kitchen sizes and cooling requirements. The chief financial officer (CFO) at Lamothe has been looking at the segmented income statement for the fan and is concerned about the results for the 36-inch model.

	36 Inch	44 Inch	54 Inch
Revenues	$ 374,100	$ 576,500	$ 354,300
Variable costs	232,600	286,680	164,500
Fixed costs allocated to products	148,230	226,464	139,806
Operating profit (loss)	$ (6,730)	$ 63,356	$ 49,994

If the 36-Inch model is 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 25 percent.

Required:

a. Prepare a differential cost schedule to support your recommendation.

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b. Should Lamothe Kitchen and Bath should drop the 36-Inch model product line?

Prepare a differential cost schedule to support your recommendation. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.)