Differential Analysis for a Discontinued Product

A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year:

Sales$236,800 Cost of goods sold(112,000)Gross profit$124,800 Operating expenses(142,000)Operating loss$(17,200)

It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. Because Mango Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.

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a. Prepare a differential analysis dated February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.

Continue Mango Cola (Alternative 1)Discontinue Mango Cola (Alternative 2)Differential Effects (Alternative 2)Revenues$fill in the blank 87d14a00afc1fe2_1$fill in the blank 87d14a00afc1fe2_2$fill in the blank 87d14a00afc1fe2_3Costs: Variable cost of goods soldfill in the blank 87d14a00afc1fe2_4fill in the blank 87d14a00afc1fe2_5fill in the blank 87d14a00afc1fe2_6Variable operating expensesfill in the blank 87d14a00afc1fe2_7fill in the blank 87d14a00afc1fe2_8fill in the blank 87d14a00afc1fe2_9Fixed costsfill in the blank 87d14a00afc1fe2_10fill in the blank 87d14a00afc1fe2_11fill in the blank 87d14a00afc1fe2_12Profit (Loss)$fill in the blank 87d14a00afc1fe2_13$fill in the blank 87d14a00afc1fe2_14$fill in the blank 87d14a00afc1fe2_15

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b. Should Mango Cola be retained?

YesNo