Chapter 12 Differential Analysis and Product Pricing 501 E12-2 Differential analysis report for a discontinued product obj 1 A condensed income statement by product line for Cola Beverages Inc. indicated the following for Kiwi Cola for the past year: a. Total differential variable costs, Sales $4,000,000 $2,675,000 Cost of goods sold 3,175,000 Gross profit 825,000 1,100,000 Operating expenses Loss from operations 75, It is estimated that 40% of the cost of goods sold represents fixed factory overhead costs and that 30% of the operating expenses are fixed. Since Kiwi Cola is only one of many prod ucts, the fixed costs will not be significantly affected if the product is discontinued. a. Prepare a differential analysis report for the proposed discontinuance of Kiwi Cola. b. Should Kiwi Cola be retained? Explain.