Top managers of Video Avenue are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help ma 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 Video Avenue should drop the DVD product line.

Begin by preparing a differential analysis to show whether Video Avenue should drop

Expected decrease in revenues$-$Dropping DVDs

Expected decrease in costs$-$Dropping DVDs

Expected $$ in operating income

$43000$

$q,$

$q,$

Data table

$\backslash$table$[[\backslash$table$[[$Video Avenue$],[$Income Statement$],[$For the Year Ended December $31,2024]]],[,,$Total,Blu$-$ray Discs DV$,$DVD Discs$],[$Net Sales Revenue,$$,437,000$$$,308,000$$$,129,000],[$Variable Costs,,$250,000,154,000,96,000],[$Contribution Margin,,$187,000,154,000,33,000],[$Fixed Costs:$],[$Manufacturing$,,132,000,76,000,56,000],[$Selling and Administrative,,$65,000,51,000,14,000],[$Total Fixed Costs,,$197,000,127,000,70,000],[$Operating Income $($Loss$),$$$,(10,000)$$$,27,000$$$,(37,000)$