Wowow Differential Analysis for a Discontinued Product A condensed income statement by product line for Crown Beverage Inc. indicated the following for King Cols for the past year: Sales $235,800 Cost of goods sold 109,000 Gross profit $126,800 Operating expenses 146,000 Loss from operations $(19,200) It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since King Cole is only one of many products, the fixed costs will not be materially affected if the product is discontinued a. Prepare a differential analysis, dated March 3, to determine whether King Cola should be continued (Alternative 1) or discontinued (Alternative 2), 17 an amount is zero, enter zero "O". Use a minus sign to indicate a loss. Differential Analysis Continue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2) January 21 Differential Effect Continue King Discontinue King on Income Cola (Alternative 1) Cola (Alternative 2) (Alternative 2) Revenues Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) Previous Next Check My Work Save and Eat Submit Assignment for Grading CengageNOWTO in teaching and learning turc rom Carla eBook Show Me How Variable cost of goods sold Variable operating expenses Fixed costs Income (Loss) Feb Check My W For continue and discontinue alternatives subtract the costs from the revenue se percentages to separate variable from fixed costs. Determine the differentia effect on income of the revenues, costs, and income (los) by subtracting alternative 2 from alternative 1. b. Should Star Cola be retained? Explain. Yes As indicated by the differential analysis in part (A), the income would decrease by if the product is discontinued Feedback Check My Work For continue and discontinue alternatives subtract the costs from the revenue. Use percentages to separate variable from fixed costs. Determine the differenti effect on income of the revenues, costs, and income (loss) by subtracting alternative 2 from alternative 1. Feedback Check My Work Partially correct Previous Ne Check My Work