Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for King Cola for the past year: Sales $232,600 Cost of goods sold 108,000 Gross profit $124,600 Operating expenses 142,000 Loss from operations $(17,400) 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. Since King 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 King Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2) Revenues Costs: Variable cost of goods sold. Variable operating expenses Fixed costs Income (Loss) January 21 Continue King Discontinue King Cola (Alternative 1) Cola (Alternative 2) 232,600 b. Should Star Cola be retained? Explain. 0 As indicated by the differential analysis in part (A), the income would product is discontinued. Differential Effect on Income (Alternative 2) -232,600 by $ if the