Top managers of Sunset 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 Sunset Video should drop the DVD product line. Begin by preparing a differential analysis to show whether Sunset Video 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 Decision: in operating income Requirement 2. Will dropping DVDs add $37,000 to operating income? Explain. It is to conclude that dropping the DVD product line would add $37,000 to operating income. If the company drops the DVD product line, it incur fixed expenses allocated to the DVDs. Data table Net Sales Revenue Variable Costs Contribution Margin Fixed Costs: Sunset Video Income Statement For the Year Ended December 31, 2024 Total Blu-ray Discs DVD Discs $ 431,000 $ 301,000 $ 130,000 246,000 149,000 97,000 185,000 152,000 33,000 Manufacturing 128,000 71,000 57,000 Selling and Administrative 63,000 50,000 13,000 Total Fixed Costs 191,000 121,000 70,000 $ (6,000) $ Operating Income (Loss) 31,000 $ (37,000) Print Done Requirements 1. Prepare a differential analysis to show whether Sunset Video should drop the DVD product line. 2. Will dropping DVDs add $37,000 to operating income? Explain. Print Done