Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75percent 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'stotal fixed costs would be reduced by 15 percent.Segmented income statements appear as follows:Original$32,500Strawberry$43,50039,150ProductOrange$51,000SalesVariable costs22,75040,800$10,2007,500$ 9,750$ 4,3506,000$(1,650)Contribution margin4,700$ 5,050Fixed costs allocated to each product lineOperating profit (loss)$ 2,700Required:a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" ifthere is no effect.)Alternative:Status QuoDifferenceDropStrawberryRevenueLess: Variable costsContribution marginLess: Fixed costsOperating profit (loss)

The variable costs vary according to the production. So if…

Answered: Iropped, would be

Business

Accounting

Iropped, would be

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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