O'Neil Enterprises produces a line of canned soups for sale at supermarkets across the country. Demand has been 'soft'' recently and the company is operating at 75 percent of capacity. The company is considering dropping one of the soups, beef barley, in hopes of improving profitability. If beef barley is dropped, the revenue associated with it will be lost and the related variable costs saved. The CFO estimates that the fixed costs will also be reduced by 25 percent. The following product line statements are available: Product Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (logs) Broth $34,200 22,500 $11.700 5,700 $ 6,000 Beef Barley $44,300 39,600 $ 4,700 7,000 $12,300) Minestrone $52,700 41,100 $11,600 8,100 $ 3,500 Required: a-1. Complete the following differential cost schedule. Status Quo Alternative: Drop Beef Barley Difference (all lower under the alternative) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) a-2. From an operating profit perspective, should O'Neil drop the boof barley lino? Yes No b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O'Neil customers buy more than one soup flavor and if beef barley is not available from O'Neil, some of them might stop buying the other soups as well. She estimates that 10 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped. b-1. Complete the following differential cost schedule. Status Quo Alternative: Drop Beef Barley Difference (all lower under the alternative) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line? Yes No