The condensed product- line income statement for Dish N€™ Dat Company for the month of March is as follows:

Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expenses. Dish N€™ Dat assumes that fixed costs would not be materially affected if the Cups line were discontinued.
a. Prepare a differential analysis dated March 31, 2014, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2).
b. Should the Cups line be retained?Explain.

Dish N'Dat Company Product-Line Income Statement For the Month Ended March 31, 2014 Bowls Plates Cups Sales Cost of goods sold Gross proft Selling and administrative expenses Income from operations 571,000 105,700 $31,300 32,600 42 300 $38400 S 6340014500 27,40042800 16700 16800 11,000 20,600