The condensed product-line income statement for Suffolk China Ware Company for the month of May is as follows:

Suffolk China Ware Company Product-Line Income Statement For the Month Ended May 31
	Bowls			Plates			Cups
Sales	$64,100			$90,100			$26,300
Cost of goods sold	26,100			32,400			13,900
Gross profit	$38,000			$57,700			$12,400
Selling and administrative expenses	30,000			35,800			15,700
Income from operations	$8,000			$21,900			$(3,300)

Fixed costs are 14% of the cost of goods sold and 44% of the selling and administrative expenses. Suffolk China Ware 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 "0". 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
	Continue Cups (Alternative 1)	Discontinue Cups (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$	$	$
Costs:
Variable cost of goods sold
Variable selling and admin. expenses
Fixed costs
Income (Loss)	$	$	$

b. Should the Cups line be retained? Explain.

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