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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 $$12,750,000$

Cost of goods sold $8,500,000$

Gross profit $ $4,250,000$

Operating expenses $6,000,000$

Loss from operations $ $(1,750,000)$

It is estimated that $25\%$ of the cost of goods sold represents fixed factory overhead costs and that $15\%$ of the operating expenses are fixed. Because Fruit 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 January $5$ to determine whether Fruit Cola should be continued $($Alternative $1)$ or discontinued $($Alternative $2).$ If an amount is zero, enter $"0".$ 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 $fill in the blank $71$af$530$b$405$c$00$a$\_1$

$fill in the blank $71$af$530$b$405$c$00$a$\_2$

$fill in the blank $71$af$530$b$405$c$00$a$\_3$

Costs:

Variable cost of goods sold fill in the blank $71$af$530$b$405$c$00$a$\_4$

fill in the blank $71$af$530$b$405$c$00$a$\_5$

fill in the blank $71$af$530$b$405$c$00$a$\_6$

Variable operating expenses fill in the blank $71$af$530$b$405$c$00$a$\_7$

fill in the blank $71$af$530$b$405$c$00$a$\_8$

fill in the blank $71$af$530$b$405$c$00$a$\_9$

Fixed costs fill in the blank $71$af$530$b$405$c$00$a$\_10$

fill in the blank $71$af$530$b$405$c$00$a$\_11$

fill in the blank $71$af$530$b$405$c$00$a$\_12$

Income $($Loss$)$ $fill in the blank $71$af$530$b$405$c$00$a$\_13$

$fill in the blank $71$af$530$b$405$c$00$a$\_14$

$fill in the blank $71$af$530$b$405$c$00$a$\_15$

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b$.$ Should Fruit Cola be retained?