Question: Top managers of Movie Street are alarmed by their operating

Top managers of Movie Street 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 Movie Street should drop the DVD product line.
2. Will dropping DVDs add $ 41,000 to operating income?Explain.
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  • CreatedJanuary 16, 2015
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