Differential Analysis Report 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! Sales $234,000 (109,000) Cost of goods sold Gross pront $125,000 Operating expenses (145,000) $(20,000) Operating loss It is estimated that 16% 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 significantly affected if the product is discontinued. a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola. British Beverage Inc. Proposal to Discontinue Royal Cola Differential Analysis Report Differential revenue from annual sales of Royal Cola: Revenue from sales Differential cost of annual sales of Royal Cola: Variable cost of goods sold only one of many products, the fixed costs will not be significantly affected if the product is discontinued. a. Prepare a differential analysis report for the proposed discontinuance of Royal Cola British Beverage Inc. Proposal to Discontinue Royal Cola Differential Analysis Report Differential revenue from annual sales of Royal Cola: Revenue from sales Ditterential cost of annual sales of Royal Cola: Variable cost of goods sold Variable operating expenses Annual differential income from sales of Royal Cola