?Exercise $4-45($Algo$)$ ?Dropping Product Lines $($LO $4-4)$

Gilbert Canned Produce $($GCP$)$ ?packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at $82$ ?percent of capacity. Worried about the company$$s performance, the chief marketing officer is considering dropping the canned sweet peas. If sweet peas are dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company$$s total fixed costs would be reduced by $15$ ?percent.

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Segmented income statements appear as follows:

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? Green Beans Sweet Peas Tomatoes

Sales $ $91,000$ ?$ $135,500$ ?$ $158,700$

Variable costs $61,000118,400123,300$

Contribution margin $ $30,000$ ?$ $17,100$ ?$ $35,400$

Fixed costs allocated to each product line $13,58022,34034,360$

Operating profit $($loss$)$ ?$ $16,420$ ?$ $(5,240)$ ?$ $1,040$

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Required:

a$.$ ?Prepare a differential cost schedule.

b$.$ ?Should Gilbert Canned Produce drop the sweet pea product line?