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What am I doing wrong? My calculations seem correct :( Please help? Cotrone Beverages makes energy drinks in three flavors: Original. Strawberry, and Orange. The
What am I doing wrong? My calculations seem correct :( Please help?
Cotrone Beverages makes energy drinks in three flavors: Original. Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. if Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent Segmented Income statements appear as follows: Product Original Strawberry Orange Sales $33,280 $42,800 $51,200 Variable costs 23, 240 38,520 40,960 Contribution margin $ 9,960 $ 4,280 Fixed costs allocated to each product line Operating profit (loss) $ 5,360 $(1,620) $ 2,440 $10.240 7,800 4.680 5,988 Required: a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Answer is complete but not entirely correct. Alternative: Drop Status Quo Difference Strawberry S Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) 127,200 $ 102,720 24,480ls 18,300 8.1805 IS 84,400 64,200 20,200 S 12,400 5,560 XS 42,800 38,520 4,280 3,860 % 820 decrease decrease decrease decrease decrease IS b. Should Cotrone drop the Strawberry product line? Yes NoStep by Step Solution
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