Top managers of Movies and More 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 Movies and More should drop the DVD product line. Begin by preparing a differential analysis to show whether Movies and More 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 Expected in operating income Decision: Requirement 2. Will dropping DVDs add $38,000 to operating income? Explain. It is to conclude that dropping the DVD product line would add $38,000 to operating income. If the company drops the DVD product line, it vincur fixed expenses allocated to the DVDs. X i Data Table DVD Discs 120,000 91,000 Movies and More Income Statement For the Year Ended December 31, 2018 Blu-ray Total Discs Net Sales Revenue $ 420,000 $ 300,000 $ Variable Costs 244,000 153,000 Contribution Margin 176,000 147,000 Fixed Costs: Manufacturing 133,000 78,000 Selling and Administrative 61,000 49,000 Total Fixed Expenses 194,000 127,000 Operating Income (Loss) (18,000) $ 20,000 $ 29,000 55,000 12,000 67,000 (38,000) Print Done