Differential Analysis for a Discontinued Product

A condensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola for the past year:

Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola for the past year: $234,900 Cost of goods sold 111.000 Gross profit Operating expenses 143,000 Loss from operations 19,100) $123,900 It is estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 19% o the operating expenses are costs wll not be materlally affected if the product is dlscontinued ea nce Royal coals on r one of many ot : e c 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) January 21 Continue Royal Discontinue Royal Cola (Alternative 1) Cola (Altenative 2) Differential Effect Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) b. Should Star Cola be retained? Explain. As indicated by the differential analysis in part (A), the income would by $ if the product is discontinued