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	$65,700			$89,700			$26,900
Cost of goods sold	26,400			32,700			15,600
Gross profit	$39,300			$57,000			$11,300
Selling and administrative expenses	29,700			35,800			15,100
Income from operations	$9,600			$21,200			$(3,800)

Fixed costs are 17% of the cost of goods sold and 42% of the selling and administrative expenses. Suffolk China Ware assumes that fixed costs would not be materially affected if the Cups line were discontinued.

Question Content Area

a. Prepare a differential analysis dated May 31 to determine whether to Continue Cups (Alternative 1) or Discontinue Cups (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 (Alternative 2)
Revenues	$fill in the blank c6dba7fc8fe303d_1	$fill in the blank c6dba7fc8fe303d_2	$fill in the blank c6dba7fc8fe303d_3
Costs:
Variable cost of goods sold	fill in the blank c6dba7fc8fe303d_4	fill in the blank c6dba7fc8fe303d_5	fill in the blank c6dba7fc8fe303d_6
Variable selling and admin. expenses	fill in the blank c6dba7fc8fe303d_7	fill in the blank c6dba7fc8fe303d_8	fill in the blank c6dba7fc8fe303d_9
Fixed costs	fill in the blank c6dba7fc8fe303d_10	fill in the blank c6dba7fc8fe303d_11	fill in the blank c6dba7fc8fe303d_12
Profit (loss)	$fill in the blank c6dba7fc8fe303d_13	$fill in the blank c6dba7fc8fe303d_14	$fill in the blank c6dba7fc8fe303d_15

Question Content Area

b. Should the Cups line be retained? Explain.

YesNo

As indicated by the differential analysis in part (a), the income will

decreaseincrease

by $fill in the blank f062820a8fe7f9d_3 if the Cups line is discontinued.