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:

It is estimated that $13\%$ 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 to Continue Royal Cola $($Alternative $1)$ or Discontinue Royal Cola $($Alternative $2).$ If an amount is

zero, enter zero $"0".$ For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis

Continue Royal Cola $($Alt$.1)$ or Discontinue Royal Cola $($Alt$.2)$

March $3$