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Differential Analysis Report 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: Sales $233,600 Cost of goods sold (108,000) Gross profit $125,600 (144,000) Operating expenses $(18,400) Operating loss It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 19% 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. Crown Beverage Inc. Proposal to Discontinue Royal Cola Differential Analysis Report Differential revenue from annual sales of Royal Cola: Revenue from sales 233,600 Differential cost of annual sales of Royal Cola: Variable cost of goods sold b. Which of the following statements about Royal Cola is true