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

	Total	Blu-Ray Discs	DVD 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.

I have included a screenshot of the spreadsheet I need to fill out below. Thank you for your explanation and help!

Requirements '1. Prepare a differential analysis and explain its meaning. 1 Will dropping DVDS add $43,000 to operating income? Explain. Evolution: Requirement 1 Expected decrease in operating income Requirement 2