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, 2016

1		Bowls	Plates	Cups
2	Sales	$70,960.00	$105,450.00	$31,760.00
3	Cost of goods sold	32,990.00	42,680.00	16,710.00
4	Gross profit	$37,970.00	$62,770.00	$15,050.00
5	Selling and administrative expenses	27,350.00	42,530.00	16,670.00
6	Income from operations	$10,620.00	$20,240.00	$(1,620.00)

Fixed costs are 30% 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, 2016, 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

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

A. Prepare a differential analysis dated March 31, 2016, 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.

Question not attempted.

Score: 0/89

Differential Analysis

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

March 31, 2016

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

B. Should the Cups line be retained? Explain.

Yes

No

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