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

Sales $236,600

Cost of goods sold (109,000)

Gross profit $127,600

Operating expenses (146,000)

Operating loss $(18,400)

It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 20% of the operating expenses are fixed. Because Mango 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 February 29 to determine whether Mango 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) Mango Cola

February 29

Continue

Mango Cola

(Alternative 1) Discontinue

Mango Cola

(Alternative 2) Differential

Effects

(Alternative 2)

Revenues $fill in the blank 1822ad044f8f077_1

$fill in the blank 1822ad044f8f077_2

$fill in the blank 1822ad044f8f077_3

Costs:

Variable cost of goods sold fill in the blank 1822ad044f8f077_4

fill in the blank 1822ad044f8f077_5

fill in the blank 1822ad044f8f077_6

Variable operating expenses fill in the blank 1822ad044f8f077_7

fill in the blank 1822ad044f8f077_8

fill in the blank 1822ad044f8f077_9

Fixed costs fill in the blank 1822ad044f8f077_10

fill in the blank 1822ad044f8f077_11

fill in the blank 1822ad044f8f077_12

Profit (Loss) $fill in the blank 1822ad044f8f077_13

$fill in the blank 1822ad044f8f077_14

$fill in the blank 1822ad044f8f077_15

Question Content Area

b. Should Mango Cola be retained?

Dufferestal Anslysis for a Discontinued Product A condensed incerme stotement by product line for Warick Deverage inc, vacoted the following for Mango Cols for the pas year: Tt is eatimated that 1654 of the cost of goods sold represents foced factory overted costs and that 20% of the operating expenses are fixed. Because Mango Cola is only one of many prodscts, the fined costs will not be materialiy affected if the product is discantinued. required, use a minus sign to ind cate a loss. B. Should Mango Cola be retained