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Top managers of Movies are Best are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the
Top managers of Movies are Best 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: E (Click the icon to view the analysis.) Assume that Movies are Best can avoid $40,000 of fixed costs by dropping the DVD product line (these costs are direct fixed costs of the DVD product line). Prepare a differential analysis show whether Movies are Best should stop selling DVDs. (Enter decreases to revenues with a parentheses or minus sign.) Data Table Expected decrease in revenues Expected decrease in costs: Variable costs Movies are Best Fixed costs Expected decrease in total costs Expected in operating income Income Statement For the Year Ended December 31, 2018 Blu-ray Total Discs DVD Discs Net Sales Revenue $ 423,000 $ 245,000 300,000 $ 151,000 123,000 94.000 Variable Costs Contribution Margin 178,000 149,000 29,000 Fixed Costs: 130,000 66,000 73,000 56,000 57,000 10,000 Manufacturing Selling and Administrative Total Fixed Expenses 196,000 129,000 67,000 $ Operating Income (Loss) (18,000) $ 20,000 $ (38,000) Print Done
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