Complete a and b a. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount iszero, enter zero "0". Use a minus sign to indicate a loss.Differential AnalysisContinue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2)January 21Differential EffectContinue RoyalDiscontinue Royalon IncomeCola (Alternative 1) Cola (Alternative 2)(Alternative 2)Revenues2$Costs:Variable cost of goods soldVariable operating expensesFixed costsIncome (Loss)b. Should Star Cola be retained? Explain.As indicated by the differential analysis in part (A), the income wouldby $if the product is discontinued. Differential Analysis for a Discontinued ProductA condensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola for the past year:Sales$236,500Cost of goods sold109,000Gross profit$127,500Operating expenses143,000Loss from operations$(15,500)It is estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since Royal Cola is only oneof many products, the fixed costs will not be materially affected if the product is discontinued.a. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount iszero, enter zero "0". Use a minus sign to indicate a loss.Differential AnalysisContinue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2)January 21Differential EffectContinue RoyalDiscontinue Royalon IncomeCola (Alternative 1) Cola (Alternative 2)(Alternative 2)RevenuesCosts:Variable cost of goods soldVariable operating expensesFixed costsIncome (Loss)

The differential analysis helps to analyse the two alternative and effect of such alternative on the…

ondensed income statement by product line for Crown Beverage Inc. indicated the following for Royal Cola for the past year: les $236,500 st of goods sold 109,000 oss profit $127,500 erating expenses 143,000 ss from operations $(15,500) s estimated that 15% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since Royal Cola is only one nany products, the fixed costs will not be materially affected if the product is discontinued. Prepare a differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is o, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue Royal Cola (Alt. 1) or Discontinue Royal Cola (Alt. 2) January 21 Differential Effect Discontinue Royal Continue Royal Cola (Alternative 1) Cola (Alternative 2) on Income (Alternative 2) evenues osts: Variable cost of goods sold Variable operating expenses Fixed costs ncome (Loss)