Top managers of Movie Plus 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 Movie Plus should drop the DVD product line.

Begin by preparing a differential analysis to show whether Movie Plus should drop the DVDs product line. $($Enter decreases to profits with a parentheses or minus sign.$)$

Expected decrease in revenues$-$Dropping DVDs

Expected decrease in costs$-$Dropping DVDs

Data table

Expected

in operating income

Requirements

Prepare a differential analysis to show whether Movie Plus should drop the

DVD product line.

Will dropping DVDs add $$40,000$ to operating income? Explain.