E12-2 Differential analysis report for a discontinued product A condensed income statement by product line for Garcia Beverages Inc. indicated the fol- lowing for Melon Cola for the past year: Sales Cost of goods sold Gross profit Operating expenses Operating loss 3,750,000 (2,250,000) $1,500,000 (1,800,000) (300,000 It is estimated that 20% of the cost of goods sold represents fixed factory overhead costs and that 35% of the operating expenses are fixed. Since Melon Cola is only one of many products, the fixed costs will not be significantly affected if the product is discontinued . Prepare a differential analysis report for the proposed discontinuance of Melon Cola. . Should Melon Cola be retained? Explain