Problem 1A: Discontinued Product (12+3) Brandy Inc. produces a variety of alcoholic beverages, One of its products - French Brandy has been reporting a loss for a number of years and management is considering discontinuing the product. 5 The following information is provided from the income statement prepared for the Brandy Division for 20Y2 where the company produces and sells 12,000 bottles. \begin{tabular}{|c|l|r|} \hline 7 & & $ \\ \hline 8 & Sales revenue & $1,680,000 \\ 9 & Variable cost of goods sold (COGS) & $720,000 \\ 10 & Fixed Cost of Goods Sold (COGS) & $360,000 \\ \hline 11 & Gross Profit & $600,000 \\ 12 & Variable selling expenses & $480,000 \\ 13 & Fixed selling expenses & $240,000 \\ \hline 14 & Operating loss & ($120,000) \\ \hline \end{tabular} The fixed COGS and fixed selling costs are an allocation of the total fixed costs of the company and are unavoidable if the product is discontinued. Required: i) Prepare a differential analysis using the table below to recommend if the product should be retained (Alt. 1) or discontinued (Alt. . Differential Analysis Retain (Alt. 1) or Discontinue (Alt. 2) selling Brandy i) Do you recommend that the company stops producing Brandy? Explain your answer. Recommendation and rationale: Problem 18: Make or Buy (12+2) Assume that a foreign manufacturer can supply the company with the bottles of Brandy at a cost of $80 per unit. The current oroduction costs to nroduce and sall a hottle of hranitu ara as fnllhwa: 1 If the bottles of brandy are bought from the foreign manufacturer, the fixed cost of goods sold are unavoidable as they are allocated fixed costs. However, 25% of the fixed selling expenses will be avoided as one sales person can be made redundant, and 50% of the variable selling costs will be avoided from buying the brandy Required: i) Prepare a differential analysis using the table below to recommend if the company should