The condensed product-line income statement for Porcelain Tableware Company for the month of December is as follows:

Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be materially affected if the Cups line were discontinued.

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a. Prepare a differential analysis dated December 31, 2012, to determine if cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0".

Differential Analysis
Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2)
December 31, 2012
		Continue Cups (Alternative 1)		Discontinue Cups (Alternative 2)		Differential Effect on Income (Alternative 2)
Revenues		$ Correct 8 of Item 1		$ Correct 9 of Item 1		$ Correct 10 of Item 1
Costs:
Variable cost of goods sold		Correct 13 of Item 1		Correct 14 of Item 1		Correct 15 of Item 1
Variable selling and admin. expenses		Correct 17 of Item 1		Correct 18 of Item 1		Correct 19 of Item 1
Fixed costs		Correct 21 of Item 1		Correct 22 of Item 1		Correct 23 of Item 1
Income (Loss)		$ Correct 25 of Item 1		$ Correct 26 of Item 1		$

The condensed product-line income statement for Porcelain Tableware Company for the month of December is as follows: Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be materially affected if the Cups line were discontinued. Prepare a differential analysis dated December 31, 2012, to determine if cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0