Question
A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year: Sales $233,800 Cost of
A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year:
Sales $233,800
Cost of goods sold 109,000
Gross profit $124,800
Operating expenses 143,000
Loss from operations $(18,200)
It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. Question Content Area a. Prepare a differential analysis, dated March 3, to determine whether to Continue King Cola (Alternative 1) or Discontinue King Cola (Alternative 2). If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.
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