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 OrangeSales $ 65,200 $ 85,600 $ 102,400Variable costs 44,000 77,200 80,200Contribution margin $ 21,200 $ 8,400 $ 22,200Fixed costs allocated to each product line 9,400 12,000 14,200Operating profit (loss) $ 11,800 $ (3,600 ) $ 8,000Required:a. Prepare a differential cost schedule.

Status Quo Alternative:DropU.S. to Europe Difference

Revenue

Less: Variable costs

Contribution margin

Less: Fixed costs

Operating profit (loss)