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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
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: (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling DVDs. Read the requirements Requirement 1. Prepare a differential analysis to show whether Best Video should drop the DVD product line. Begin by preparing a differential analysis to show whether Best Video should drop the DVDs product line. (Enter decreases to profits with a parentheses or minus sign.) Data Table Expected decrease in revenuesDropping DVDs Expected decrease in costs-Dropping DVDs Expected in operating income Best Video Requirements Income Statement For the Year Ended December 31, 2018 Total Blu-ray Discs DVD Discs $ 431,000 $ 305,000 $ 126,000 249,000 150,000 99,000 Net Sales Revenue 1. Prepare a differential analysis to show whether Best Video should drop the DVD product line. 2. Will dropping DVDs add $45,000 to operating income? Explain. 182,000 155,000 27,000 Variable Costs Contribution Margin Fixed Costs: Manufacturing Print Done 133,000 76,000 78,000 59,000 55,000 17.000 Selling and Administrative 209,000 137,000 72,000 Total Fixed Expenses Operating Income (Loss) $ (27,000) $ 18,000 $ (45,000) Choose from any list or enter any number in the input fields and then click Check Answer. Print Done parts remaining UTCAT
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