Top managers of Movie Street 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. Requirements Requirement 1. Prepare an incremental analysis to show whether Movie Street should drop the DVD product line. Will dropping DVDS add to operating income? Explain. (Use parentheses or a minus sign to enter a decrease in operating income.) Movie Street Analysis of Dropping the DVD Product Line Expected decrease in revenues Expected decrease in expenses: Variable expenses Fixed expenses Total expected decrease in expenses Expected increase (decrease) in operating income Decision: drops the DVD product line, it It is to conclude that dropping DVDs would add to operating income. If the company Incur $ in fixed expenses allocated to DVDs. Requirement 2. Assume that Movie Street can avoid $34,000 of fixed expenses by dropping the DVD product line. (These nete ara dirant fivert nete of the nn nnnt line 1 Dranare an incremental analuele tn ehnu whathar Maula Straat chruidd einn Enter any number in the edit fields and then continue to the next question. Question Help Top managers of Movie Street 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. Requirements Requirement 2. Assume that Movie Street can avoid $34,000 of fixed expenses by dropping the DVD product line. (These costs are direct fixed costs of the DVD product line.) Prepare an incremental analysis to show whether Movie Street should stop selling DVDs. (Use parentheses or a minus sign to enter a decrease in operating income.) Movie Street Analysis of Dropping the DVD Product Line Expected decrease in revenues Expected decrease in expenses: Variable expenses Fixed expenses Total expected decrease in expenses Expected increase (decrease) in operating income Decision: because the product's incremental revenues its incremental costs. Requirement 3. Now, assume that all $81,000 of fixed costs assigned to DVDs are direct fixed costs and can be avoided if the company stops selling DVDs. However, marketing has concluded that Blu-ray disc sales would be adversely affected by discontinuing the DVD line. (Retailers want to buy both from the same supplier.) Blu-ray disc production and sales would decline Enter any number in the edit fields and then continue to the next question. Top managers of Movie Street 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. Requirements discontinuing the DVD line. (Retailers want to buy both from the same supplier.) Blu-ray disc production and sales would decline 10%. What should the company do? Prepare an incremental analysis. (Use parentheses or a minus sign to enter a decrease in operating income.) Movie Street Analysis of Dropping the DVD Product Line Expected decrease revenues Expected decrease in expenses: Variable expenses Fixed expenses Total expected decrease in expenses Expected increase (decrease) in operating income Lost contribution margin on Blu-ray discs Not expected increase (decrease) in operating income Decision: Movie Street should consider This would let Movie Street its operating Enter any number in the edit fields and then continue to the next question. Movie Street are alarmed by their operating losses. They are considering dropping the DVD pr tants have prepared the following analysis to help make this decision. i Analysis - X Sales revenue.. C Variable expenses ecl 01 - cte Contribution margin Fixed expenses: Total Blu-ray Discs DVDs $ 437,000 $ 305,000 $ 132,000 233,000 153,000 80,000 204,000 152,000 52,000 Manufacturing 123,000 76,000 47,000 Marketing and administrative 91,000 57,000 34,000 incr Total fixed expenses 214,000 133,000 81,000 ribut Operating income (loss). (10,000) $ 19,000 $ (29,000) acted Movie Print Done number in its ope