A condensed income statement by product line for Yukon Beverages Inc. indicated the following for Whitehorse Cola for the past year:

Sales ..............................................$ 1,875,000
Cost of goods sold .........................(1,125,000)
Gross profit ......................................$ 750,000
Operating expenses ...........................(900,000 )
Operating loss ..................................$ (150,000)

It is estimated that 20% of the cost of goods sold represents fixed factory overhead costs and that 35% of the operating expenses are fixed. Since Whitehorse Cola is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. 

a. Prepare a differential analysis report for the proposed discontinuance of Whitehorse Cola.
b. Should Whitehorse Cola be retained? Explain.