Top managers of Video Avenue 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: E (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 Video Avenue should drop the DVD product line. Begin by preparing a differential analysis to show whether Video Avenue should drop the DVDS product line. (Enter decreases to profits with a parentheses or minus sign.) Expected decrease in revenues-Dropping DVDS - X Data Table Expected decrease in costs-Dropping DVDS Expected in operating income Video Avenue Requirements Income Statement For the Year Ended December 31, 2018 Total Blu-ray Discs DVD Discs 1. Prepare a differential analysis to show whether Video Avenue should drop the DVD product line. 2. Will dropping DVDS add $37,000 to operating income? Explain. Net Sales Revenue 437,000 $ 308,000 $ 129,000 Variable Costs 250,000 154,000 96,000 Contribution Margin 187,000 154,000 33,000 Fixed Costs: Print Done Manufacturing 132,000 76,000 56,000 Choos 65,000 51,000 14,000 Selling and Administrative Total Fixed Expenses 197,000 127,000 70.000 Help Me Solve This Video Get More Help - 24 (10,000) $ 27,000 $ (37,000) Operating Income (Loss)
Top managers of Video Avenue 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: E (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 Video Avenue should drop the DVD product line. Begin by preparing a differential analysis to show whether Video Avenue should drop the DVDS product line. (Enter decreases to profits with a parentheses or minus sign.) Expected decrease in revenues-Dropping DVDS - X Data Table Expected decrease in costs-Dropping DVDS Expected in operating income Video Avenue Requirements Income Statement For the Year Ended December 31, 2018 Total Blu-ray Discs DVD Discs 1. Prepare a differential analysis to show whether Video Avenue should drop the DVD product line. 2. Will dropping DVDS add $37,000 to operating income? Explain. Net Sales Revenue 437,000 $ 308,000 $ 129,000 Variable Costs 250,000 154,000 96,000 Contribution Margin 187,000 154,000 33,000 Fixed Costs: Print Done Manufacturing 132,000 76,000 56,000 Choos 65,000 51,000 14,000 Selling and Administrative Total Fixed Expenses 197,000 127,000 70.000 Help Me Solve This Video Get More Help - 24 (10,000) $ 27,000 $ (37,000) Operating Income (Loss)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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HW 3. There are two parts. Please complete both :)
Transcribed Image Text:Top managers of Video Avenue 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:
E (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 Video Avenue should drop the DVD product line.
Begin by preparing a differential analysis to show whether Video Avenue should drop the DVDS product line. (Enter decreases to profits with a parentheses or minus sign.)
Expected decrease in revenues-Dropping DVDS
- X
Data Table
Expected decrease in costs-Dropping DVDS
Expected
in operating income
Video Avenue
Requirements
Income Statement
For the Year Ended December 31, 2018
Total
Blu-ray Discs DVD Discs
1. Prepare a differential analysis to show whether Video Avenue should drop the
DVD product line.
Net Sales Revenue
$
437,000 $
308,000 $
129,000
2. Will dropping DVDS add $37,000 to operating income? Explain.
250,000
154,000
96,000
Variable Costs
Contribution Margin
187,000
154,000
33,000
Fixed Costs:
Print
Done
Manufacturing
132,000
76,000
56,000
Choos
65,000
51,000
14,000
Selling and Administrative
Total Fixed Expenses
197,000
127,000
70,000
Help Me Solve This
Video
Get More Help -
$
(10,000) $
27,000 $
(37,000)
Operating Income (Loss)
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