Top managers of Best Video are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision: BEST VIDEO Income Statement For the Year Ended December 31, 2016 DVD Blu-ray Discs Total Discs Sales Revenue $ 432,000 $ 309,000 $ 123,000 Variable Costs 240,000 150,000 90,000 Contribution Margin 192,000 159,000 33,000 Fixed Costs: Manufacturing 134,000 75,000 59,000 Selling and Administrative 69,000 52,000 17,000 Total Fixed Expenses 203,000 127,000 76,000 Operating Income (Loss) $ (11,000) $ 32,000 $ (43,000) Total fixed costs will not change if the company stops selling DVDS. Requirements 1. Prepare a differential analysis to show whether Best Video should drop the DVD product line. 2. Will dropping DVDS add $43,000 to operating income? Explain.