Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements appear as follows:

Required
Prepare a differential cost schedule like the one in Exhibit 4.8 to indicate whether Cotrone should drop the Strawberry product line.

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Product Original Strawberry Orange s 8,400 22,200 12,00014,200 Fixed costs allocated to each product line...9,400 Operating profit(loss). . . .- 11140 106001