O ezto.mheducation.com/hm.tpx 16.70 points Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 percent of capacity. Worried about the company’s performance, the company president is considering dropping the Straaberry 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 Original Strawberry Orange $33,100 $42,100 $51,600 23,170 37890 41,280 9,9304,210 $10,320 4,7005,600 7400 s 5,230(1,390) 2,920 Sales Variable costs Contribution margin Fixed costs allocated to each product line Operating proft (loss) Required: a. Prepare a difterential cost schedule. Alternative: Diference (all lower under Status Quo Drop Strawberry the alternative) Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) b. Should Cotrone drop the Straaberry product line? Yes O No O Type here to search
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