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 $ 32,400 $ 43,300 $ 51,400 Variable costs 22,680 38,970 41,120 Contribution margin $ 9,720 $ 4,330 $ 10,280 Fixed costs allocated to each product line 4,000 6,200 7,200 Operating profit (loss) $ 5,720 $ (1,870 ) $ 3,080 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.) b. Should Cotrone drop the Strawberry product line

Answer rating: 100% (QA)

Sure lets prepare a differential cost schedule Original Strawberry Orange Total Sale... View the full answer