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 fixed costs would be reduced by 15 percent.
Segmented income statements appear as follows:
ProductOriginalStrawberryOrangeSales$32,400$43,200$51,000Variable costs22,68038,88040,800Contribution margin$9,720$4,320$10,200Fixed costs allocated to each product line5,0006,2007,500Operating profit (loss)$4,720$(1,880)$2,700
how to create a differential cost schedule
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