Cotrone Beverages makes energy drinks in three flavors. Original, Strawberry, and Orange. The company is...
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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 foxed costs would be reduced by 15 percent Segmented income statements appear as follows: * Product Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating profit (loss) Org $32,500 22.750 39,750 5.000 5.4.250 Strawberry $42,400 33.160 54,240 5.820 $(1,560) Orange $50,900 40,220 310, 180 7.500 5 2,680 Required: cos . Prepare a differential cost schedule. (Select option "increase" or "cecrease", keeping Status Quo as the base. Select "none" 11 there is no effect.) Status Quo Alternative Drop Strawberry Difference Revenue Less: Variable costs Contribution margin Less Fed costs Operating profit (050) b. Should Cotrone drop the Strawberry product line
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