Exerclse $4\mathrm{.}44($Algo$)$ Dropping Product LInes $($LO $4-4)$

Lamothe Kitchen and Bath makes products for the home, which it sells through major retallers and remodeling $($do$-$lt$-$yourself, or DIY$)$ outlets. One product that has had varying success is a celling fan for the kitchen. The fan comes in three sizes $(36-$lnch$,44-$inch, and $54-$Inch$),$ which are designed for varlous kitchen sizes and cooling requirements. The chlef financlal officer $($CFO$)$ at Lamothe has been looking at the segmented income statement for the fan and is concerned about the results for the $36-$inch model.

$\backslash$table$[[,36$ Inch,$44$ Inch,$54$ Inch$],[$Revenues$,$$ $395,006,$$ $599,600,$$ $377,400],[$Variable costs,$243,606,297,680,175,500],[$Fixed costs allocated to products,$159,230,237,464,150,806],[$Operating profit $($loss$),$$ $(7,830),$$$64,456,$$ $51,694]]$

If the $36-$Inch model is dropped, the revenue assoclated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by $25$ percent.

Required:

a$.$ Prepare a differential cost schedule to support your recommendation.

b$.$ Should Lamothe Kitchen and Bath should drop the $36-$Inch model product line?