Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. Indicated the following for King Cole for the past year: Sales $233,500 Cost of goods sold 108,000 Gross profit $125,500 Operating expenses 145,000 Loss from operations $(19,500) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 23% 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 "O". Use a minus sign to indicate a loss. Differential Analysis Continue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2) January 21 Differential Effect Continue King Discontinue King Cola (Alternative 1) Cola (Alternative 2) (Alternative 2) on Income Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) b. Should Star Cola be retained? Explain. by $ if the product is As indicated by the differential analysis in part (A), the income would discontinued