A condensed income statement by product line for Warrick Beverage Inc. Indicated the following for Mango...

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A condensed income statement by product line for Warrick Beverage Inc. Indicated the following for Mango Cola for the past year: Sales Cost of goods sold Gross profit Operating expenses Operating loss $235,700 (111,000) $124,700 (145,000) $(20,300) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 18% of the operating expenses are fixed. Because Mango Cola 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 February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Mango Cola February 29 Continue Discontinue Mango Cola Differential Mango Cola Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues 235,700 0 B X 0 Costs: Variable cost of goods sold Variable operating expenses Fixed costs -235,700 000 A condensed income statement by product line for Warrick Beverage Inc. Indicated the following for Mango Cola for the past year: Sales Cost of goods sold Gross profit Operating expenses Operating loss $235,700 (111,000) $124,700 (145,000) $(20,300) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 18% of the operating expenses are fixed. Because Mango Cola 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 February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Mango Cola February 29 Continue Discontinue Mango Cola Differential Mango Cola Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues 235,700 0 B X 0 Costs: Variable cost of goods sold Variable operating expenses Fixed costs -235,700 000

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To prepare a differential analysis to determine whether Mango Cola should be continued Alternative 1 ... View the full answer