Differential Analysis for a Discontinued Product A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year Sales $236,000 Cost of goods sold (109,000) Gross profit $127,000 Operating expenses (143,000) Operating loss $(16,000) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. Decongo 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 February 29 to determine whether Mango Coia should be continued (Alternative 1) or (acontinued (Alternative 33 an amount is zero, enter "o". It required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Mango Cola February 29 Continue Discontinue Differential Effects Mango Cola Mango Cola (Alternative 1) (Alternative 2) (Alternative 2) Revenues 236.000 CO&inprogress false Continue Discontinue Differential Mango Cola Mango Cola Effects (Alternative 1) (Alternative 2) (Alternative 2) 236,000 Revenues Costs: 202,960 X Variable cost of goods sold Variable operating expenses 112,970 Fixed costs 45,290 Profit (LOSS) - 125,220 X Feedback Check My Work For continue and discontinue alternatives subtract the costs from the revenues. Use percentages to separate variable from differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. b. Should Mango Cola be retained? Feedback ck My Work BORLD Hanahontacto constatat