Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. 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	Original			Strawberry			Orange
Sales	$	33,300		$	42,400		$	50,900
Variable costs		23,310			38,160			40,720
Contribution margin	$	9,990		$	4,240		$	10,180
Fixed costs allocated to each product line		4,600			6,400			7,800
Operating profit (loss)	$	5,390		$	(2,160	)	$	2,380

Required:

a. Prepare a differential cost schedule.

	Status Quo	Alternative: Drop Strawberry	Difference (all lower under the alternative)
Revenue
Less: Variable costs
Contribution margin
Less: Fixed costs
Operating profit (loss)

b. Should Cotrone drop the Strawberry product line?

	Yes
	No