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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

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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 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.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.
If the 36-Inch model is 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 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?
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