Differential Analysis for a Discontinued Product

Differential Analysis for a Discontinued Product A condensed income statement by product line for Healthy Beverage Inc. indicated the following for Fruit Cola for the past year: Sales $233,600 109,000 Cost of goods sold Gross profit $124,600 Operating expenses 142,000 Loss from operations $(17,400) It is estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Because Fruit Cola costs will not be materially affected if the product is discontinued. only one of many products, the fixed a. Prepare a differential analysis dated January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "O". Use a minus sign to indicate a loss. Differential Analysis Continue Fruit Cola (Alt. 1) or Discontinue Fruit Cola (Alt. 2) January 5 Continue Fruit Cola (Alternative 1) Discontinue Fruit Cola (Alternative 2) Differential Effect on Income (Alternative 2) Revenues 233.600 0 233,600 Costs: Variable cost of goods sold Variable operating expenses Fixed costs Income (L055) $