A condensed income statement by product line for Crown Beverage Inc. indicated the following for King Cola for the past year:

Sales	$232,400
Cost of goods sold	109,000
Gross profit	$123,400
Operating expenses	144,000
Loss from operations	$(20,600)

It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 18% 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.

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a. Prepare a differential analysis, dated March 3, 2014, to determine whether King Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0".

Differential Analysis
Continue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2)
March 3, 2014
		Continue King Cola (Alternative 1)		Discontinue King Cola (Alternative 2)		Differential Effect on Income (Alternative 2)
Revenues		$ Correct 8 of Item 1		$ Correct 9 of Item 1		$ Correct 10 of Item 1
Costs:
Variable cost of goods sold		Correct 13 of Item 1		Correct 14 of Item 1		Correct 15 of Item 1
Variable operating expenses		Correct 17 of Item 1		Correct 18 of Item 1		Correct 19 of Item 1
Fixed costs		Correct 21 of Item 1		Correct 22 of Item 1		Correct 23 of Item 1
Income (Loss)		$ Correct 25 of Item 1		$ Correct 26 of Item 1		$ Correct 27 of Item 1

b. Should King Cola be retained? SelectYesNoCorrect 1 of Item 2