ok Exercise 4-49 (Static) Dropping Product Lines (LO 4-4) 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 20 percent. Segmented income statements appear as follows. Product Sales Original $65,200 t Variable costs 44,000 Contribution margin $21,200 ] nces Fixed costs allocated to each product line Operating profit (loss) 9,400 $11,800 Required: Strawberry $85,600 77,200 $ 8,400 12,000 $(3,600) Orange $102,400 80,200 $ 22,200 14,200 $ 8,000 a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect.) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Status Quo Alternative: Drop Strawberry Difference b. Should Cotrone drop the Strawberry product line? Yes No