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Differential analysis for a discontinued product

A condensed income statement by product line for Lavonia Beverage Inc. indicated the following for Vim Cola for the past year:

Line Item Description Amount

Sales $$237,900$

Cost of goods sold $(111,000)$

Gross profit $$126,900$

Operating expenses $(142,000)$

Operating loss $$(15,100)$

It is estimated that $12\%$ of the cost of goods sold represents fixed factory overhead costs and that $19\%$ of the operating expenses are fixed. Because Vim Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.

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a$.$ Prepare a differential analysis dated November $2$ to determine whether Vim 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 for a discontinued product

A condensed income statement by product line for Lavonia Beverage Inc. indicated the following for Vim Cola for the past year:

Differential Analysis

Continue $($Alt$.1)$ or Discontinue $($Alt$.2)$ Vim Cola

b$.$ Should Vim Cola be retained?