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Content Area Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola
Content Area Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola for the past year: Sales $233,600 Cost of goods sold 108,000 Gross profit $125,600 Operating expenses 146,000 Loss from operations $(20,400) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since Royal 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 Royal Cola (Alternative 1) or Discontinue Royal Cola (Alternative 2)
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