K Top managers of Sunset Video are alarmed by their operating losses. They are considering dropping...

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K Top managers of Sunset 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: (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling DVDs. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Sunset Video should drop the DVD product line. Begin by preparing a differential analysis to show whether Sunset Video should drop the DVDS product line. (Enter decreases to profits with a parentheses or minus sign.) Expected decrease in revenues-Dropping DVDS Expected decrease in costs-Dropping DVDs Expected in operating income Data table I Sunset Video Income Statement For the Year Ended December 31, 2024 Blu-ray Discs DVD Discs Net Sales Revenue Variable Costs Total $ 425,000 $ 304,000 $ 121,000 250,000 150,000 100,000 175,000 154,000 21,000 Contribution Margin Fixed Costs: Manufacturing Selling and Administrative 125,000 74,000 51,000 63,000 53,000 10,000 188,000 127,000 61,000 Total Fixed Costs $ Operating Income (Loss) (13,000) $ 27,000 $ (40,000) 1. Prepare a differential analysis to show whether Sunset Video should drop the DVD product line. 2. Will dropping DVDs add $40,000 to operating income? Explain. K Top managers of Sunset 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: (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling DVDs. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Sunset Video should drop the DVD product line. Begin by preparing a differential analysis to show whether Sunset Video should drop the DVDS product line. (Enter decreases to profits with a parentheses or minus sign.) Expected decrease in revenues-Dropping DVDS Expected decrease in costs-Dropping DVDs Expected in operating income Data table I Sunset Video Income Statement For the Year Ended December 31, 2024 Blu-ray Discs DVD Discs Net Sales Revenue Variable Costs Total $ 425,000 $ 304,000 $ 121,000 250,000 150,000 100,000 175,000 154,000 21,000 Contribution Margin Fixed Costs: Manufacturing Selling and Administrative 125,000 74,000 51,000 63,000 53,000 10,000 188,000 127,000 61,000 Total Fixed Costs $ Operating Income (Loss) (13,000) $ 27,000 $ (40,000) 1. Prepare a differential analysis to show whether Sunset Video should drop the DVD product line. 2. Will dropping DVDs add $40,000 to operating income? Explain.