A condensed income statement by product line for British Beverage Inc. indicated the following for...
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A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year: Sales $235,200 Cost of goods sold (108,000) Gross profit $127,200 Operating expenses (145,000) Operating loss $(17,800) It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 20% of the operating expenses are fixed. Since King 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 King Cola. British Beverage Inc. Proposal to Discontinue King Cola Differential Analysis Report Differential revenue from annual sales of King Cola: Revenue from sales Differential cost of annual sales of King Cola: Variable cost of goods sold Variable operating expenses Annual differential income from sales of King Cola
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