Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the companys performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the companys total fixed costs would be reduced by 20 percent.

Segmented income statements appear as follows:

Product	Original			Strawberry			Orange
Sales	$	65,200		$	85,600		$	102,400
Variable costs		44,000			77,200			80,200
Contribution margin	$	21,200		$	8,400		$	22,200
Fixed costs allocated to each product line		9,400			12,000			14,200
Operating profit (loss)	$	11,800		$	(3,600	)	$	8,000

Required:

a. Prepare a differential cost schedule.

b. Should Cotrone drop the Strawberry product line?

	Yes
	No