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

Line Item Description Amount

Sales $$232,300$

Cost of goods sold $(109,000)$

Gross profit $$123,300$

Operating expenses $(145,000)$

Operating loss $$(21,700)$

It is estimated that $16\%$ of the cost of goods sold represents fixed factory overhead costs and that $22\%$ of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a$.$ Prepare a differential analysis dated November $2$ to determine whether Vim Cola should be continued $($Alternative $1)$ or discontinued $($Alternative $2).$ If an amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.

Differential Analysis

Continue $($Alt$.1)$ or Discontinue $($Alt$.2)$ Vim Cola

November $2$

Line Item Description Continue

Vim Cola

$($Alternative $1)$ Discontinue

Vim Cola

$($Alternative $2)$ Differential

Effects

$($Alternative $2)$

Revenues: $fill in the blank $2$

$fill in the blank $3$

$fill in the blank $4$

Costs:

Variable cost of goods sold fill in the blank $5$

fill in the blank $6$

fill in the blank $7$

Variable operating expenses fill in the blank $8$

fill in the blank $9$

fill in the blank $10$

Fixed costs fill in the blank $11$

fill in the blank $12$

fill in the blank $13$

Profit $($Loss$)$ $fill in the blank $14$

$fill in the blank $15$

$fill in the blank $16$

b$.$ Should Vim Cola be retained?