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...

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, 2016, to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2).

b. Should the Cups line be retained? Explain.