Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc. indicated the following for Vim Cola for the past year: Sales $235,100 Cost of goods sold (109,000) Gross profit $126,100 Operating expenses Operating loss (142,000) $(15,900) It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 22% of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Prepare a differential analysis dated November 2 to determine whether Vim 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. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Vim Cola Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs November 2 Continue Vim Cola (Alternative 1) Discontinue Vim Cola Differential (Alternative 2) Effects (Alternative 2) 235,100 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions Open spreadsheet a. Prepare a differential analysis dated November 2 to determine whether Vim Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amoum zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Vim Cola November 2 Revenues: Costs: Variable cost of goods sold Variable operating expenses Fixed costs Profit (Loss) b. Should Vim Cola be retained? Yes Continue Vim Cola (Alternative 1) 235,100 Discontinue Vim Cola Differential (Alternative 2) Effects (Alternative 2) Feedback Check My Work For continue and discontinue alternatives subtract the costs from the revenues. Use percentages to separate variable from fixed costs. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. Check My Work