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Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc, indicated the following for Vim Cola for the
Differential Analysis for a Discontinued Product A condensed income statement by product line for Lavonia Beverage Inc, indicated the following for Vim Cola for the past year: It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. Because Vim 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 November 2 to determine whether vim Cola should be continued (Aiternative 1) or discontinued (Alternative 2). If an amount is zero, enter" 0. If required, use a minus sign to indicate a loss. It is estimated that 12% of the cost of goods sold represents foxed factory overtead costs and that 21% of the opersting expenses are fixed, Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Frepare a cifferential analysis dated November 2 to determine whether Vim Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "O", If required, use a minus sign to indicate a loss
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