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 company's 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 company's total fixed costs would be reduced by 15 percent. Segmented income statements appear as follows: Product Sales Original $33,200 Strawberry $43,300 Orange $51,200 Variable costs 23,240 Contribution margin $ 9,960 38,970 $ 4,330 40,960 $10,240 Fixed costs allocated to each product line Operating profit (loss) 4,200 $ 5,760 6,500 $(2,170) 7,500 $ 2,740 Required: a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Status Quo Alternative: Drop Strawberry Difference b. Should Cotrone drop the Strawberry product line? Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead Fixed overhead Total $ 34 112 14 41 $201 Trailblazers has offered to sell the assembly to Mobility for $174 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $36,650. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Trailblazers' offer Materials Labor Status Quo Alternative Variable overhead Fixed overhead applied Total costs $ 0 $ 0 Difference b. Should Mobility make rear wheel assemblies or buy them from Trailblazers? 00 Make Buy