Top managers of Movies are Best, a company providing movie rentals via vending machines or online,...

Transcribed Image Text:

Top managers of Movies are Best, a company providing movie rentals via vending machines or online, are alarmed by their operating losses. They are considering dropping the vending machine product line. Company accountants have prepared the following analysis to help make this decision: View the analysis. Assume that Movies are Bestcan avoid $35,000of direct fixed costs by dropping the vending machine product line. Prepare a differential analysis to show whether Movies are Bestshould stop renting movies via the vending machines. (Enter decreases to revenues with a parentheses or minus sign.) Expected decrease in revenues Expected decrease in costs: Variable costs Fixed costs Expected decrease in total costs Expected in operating income Anaylysis Net Sales Revenue Variable Costs Contribution Margin Fixed Costs: Movies are Best Income Statement For the Year Ended December 31, 2025 Vending Total $ 428,000 $ Online Rental 303,000 $ Machine 125,000 251,000 159,000 92,000 177,000 144,000 33,000 Manufacturing Selling and Administrative 128,000 72,000 56,000 69,000 57,000 12,000 Total Fixed Costs 197,000 129,000 68,000 $ (20,000) $ 15,000 $ (35,000) Operating Income (Loss) Top managers of Movies are Best, a company providing movie rentals via vending machines or online, are alarmed by their operating losses. They are considering dropping the vending machine product line. Company accountants have prepared the following analysis to help make this decision: View the analysis. Assume that Movies are Bestcan avoid $35,000of direct fixed costs by dropping the vending machine product line. Prepare a differential analysis to show whether Movies are Bestshould stop renting movies via the vending machines. (Enter decreases to revenues with a parentheses or minus sign.) Expected decrease in revenues Expected decrease in costs: Variable costs Fixed costs Expected decrease in total costs Expected in operating income Anaylysis Net Sales Revenue Variable Costs Contribution Margin Fixed Costs: Movies are Best Income Statement For the Year Ended December 31, 2025 Vending Total $ 428,000 $ Online Rental 303,000 $ Machine 125,000 251,000 159,000 92,000 177,000 144,000 33,000 Manufacturing Selling and Administrative 128,000 72,000 56,000 69,000 57,000 12,000 Total Fixed Costs 197,000 129,000 68,000 $ (20,000) $ 15,000 $ (35,000) Operating Income (Loss)

Answer rating: 100% (QA)

ANSWER Differential Analysis for Dropping the Vending Machine Product Line E... View the full answer