Differential Analysis for a Discontinued Product A condensed income statement by product line for British Beverage Inc. Indicated the following for Royal Cola for the past year: Sales $232,600 Cost of goods sold 112,000 Gross profit $120,600 Operating expenses 146,000 Loss from operations $(25,400) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "O". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) A January 21 Differential Effect Continue Royal Discontinue Royal on Income Cola (Alternative 1) Cola (Alternative 2) (Alternative 2) Revenues $ Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) b. Should Star Cola be retained? Explain. by if the As indicated by the differential analysis in part (A), the income would product is discontinued