The condensed product-line income statement for Dish N Dat Company for the month of March is as follows:

Dish N Dat Company

Product-Line Income Statement

For the Month Ended March 31

1		Bowls	Plates	Cups
2	Sales	$70,800.00	$106,170.00	$31,420.00
3	Cost of goods sold	32,650.00	42,340.00	16,780.00
4	Gross profit	$38,150.00	$63,830.00	$14,640.00
5	Selling and administrative expenses	27,790.00	42,350.00	16,560.00
6	Income from operations	$10,360.00	$21,480.00	$(1,920.00)

Fixed costs are 10% of the cost of goods sold and 50% of the selling and administrative expenses. Dish N Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued.

	Required:
a.	Prepare a differential analysis dated March 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
b.	Should the Cups line be retained? Explain.

Labels and Amount Descriptions

Labels
Cash flows from investing activities
Costs
Amount Descriptions
Fixed costs
Gain on sale of investments
Income (loss)
Loss on sale of investments
Revenues
Total costs
Variable cost of goods sold
Variable selling and administrative expenses

Differential Analysis

a. Prepare a differential analysis dated March 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

Differential Analysis

Continue (Alternative 1) or Discontinue (Alternative 2) Cups

March 31

1		Continue Cups	Discontinue Cups	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
3
4
5
6
7
8

Final Question

b. Should the Cups line be retained? Explain.

No

Yes x

As indicated by the differential analysis in part (a), the income will decrease by $ if the Cups line is discontinued.