Top managers of Best 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:

Total fixed costs will not change if the company stops selling DVDs.
Requirements
1. Prepare a differential analysis to show whether Best Video should drop the DVD product line.
2. Will dropping DVDs add $43,000 to operating income? Explain.

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BEST VIDEO Income Statement For the Year Ended December 31, 2016 Blu-ray Discs DVD Discs Total $ 432,000 309,000 123,000 Sales Revenue Variable Costs Contribution Margin Fixed Costs: 240,000 192,000 150,000 159,000 90,000 33,000 Manufacturing Selling and Administrative 134,000 69,000 203,000 S (11,000) 59,000 17,000 76,000 32,000 S (43.000) 75,000 52,000 127,000 Total Fixed Expenses Operating Income (Loss)