The condensed product-line income statement for Porcelain Tableware Company for the month of May is as follows: Porcelain Tableware Company Product-Line Income Statement For the Month Ended May 31 Bowls Plates Cups Sales $65,700 $90,200 $26,100 Cost of goods sold 26,700 33,400 15,100 Gross profit $39,000 $56,800 $11,000 Selling and administrative expenses 28,600 34,800 14,500 Income from operations $10,400 $22,000 $(3,500) Fixed costs are 12% 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.

a. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2) For the Month Ended May 31 Differential Effect Continue Cups Discontinue Cups on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses 110 Fixed costs Income (Loss)