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Top managers of Movie Plus are alarmed by their operating losses. They are considering dropping the DVD Assume that Movie Plus can avoid $48,000 of
Top managers of Movie Plus are alarmed by their operating losses. They are considering dropping the DVD Assume that Movie Plus can avoid $48,000 of fixed costs by dropping the DVD product line (these costs product line. Company accountants have prepared the following analysis to help make this decision: are direct fixed costs of the DVD product line). (Click the icon to view the analysis.) Prepare a differential analysis to show whether Movie Plus should stop selling DVDs. (Enter decreases to revenues with a parentheses or minus sign.) Expected decrease in revenues Expected decrease in costs: Variable costs Fixed costs Expected decrease in total costs Expected in operating income Decision: i Data Table Income Statement For the Year Ended December 31, 2018 Total Blu-ray Discs DVD Discs $ 425,000 $ 301,000 $ 124,000 244,000 150,000 94,000 Net Sales Revenue Variable Costs Contribution Margin 181,000 151,000 30,000 Fixed Costs: Manufacturing 132,000 70,000 74,000 52,000 58,000 18,000 Selling and Administrative Total Fixed Expenses 202,000 126,000 76,000 $ (21,000) $ 25,000 $ (46,000) Operating Income (Loss) Print Done
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