WEEK THREE: CHAPTER FOUR HOMEWORK A Saved N Exercise 4-49 (Algo) Dropping Product Lines (LO 4-4) 25 points 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: eBook Print Product Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Original $33,300 23, 310 $ 9,990 4,600 $ 5,390 Strawberry $43,100 38,790 $ 4,310 5,900 $(1,590) Orange $50,900 40,720 $10, 180 7,200 $ 2,980 zelene References Required: a. Prepar differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo there is no effect.) the base. Select "none" if Status Quo Alternative: Drop Strawberry Difference Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) b. Should Cotrone drop the Strawberry product line? Yes O No