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A condensed income statement by product line for British Beverage Inc. indicated the following for Royal Cola for the past year:
Sales $234,400
Cost of goods sold 111,000
Gross profit $123,400
Operating expenses 142,000
Loss from operations $(18,600)
It is estimated that 14% of the cost of goods sold represents fixed factory overhead costs and that 23% of the operating expenses are fixed. Since Royal Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
Problem a. IF WE differential analysis, dated March 3, to determine whether Royal Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter zero "0". Use a minus sign to indicate a loss.
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