Need help answering E25-14.

1418 chapter 25 E23-13 Making dropping a product decisions Learning Objective 3 Top managers of Best Video are alarmed by their operating losses. They are 1. $(33,000) considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision: X BEST VIDEO (Requirement 1 only) Income Statement For the Year Ended December 31, 2016 Blu-ray DVD Total Discs Discs Sales Revenue $ 432,000 $ 309,000 $ 123,000 Variable Costs 240,000 150,000 90,000 Contribution Margin 192,000 159,000 33,000 Fixed Costs : Manufacturing 134,000 75,000 59,000 Selling and Administrative 69,000 52,000 17,000 Total Fixed Expenses 203,000 27,000 6,000 Operating Income (Loss) $ (11,000) $ 32,000 $ (43,000) 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. Note: Exercise E25-13 must be completed before attempting Exercise E25-14. Learning Objective 3 E25-14 Making dropping a product decisions Refer to Exercise E25-13. Assume that Best Video can avoid $45,000 of fixed costs 1. $12,000 by dropping the DVD product line (these costs are direct fixed costs of the DVD product line). Prepare a differential analysis to show whether Best Video should stop selling DVDS