Acondensed income statement by product line for celestial beverage inc. indicated the following for star cola for the past year: sales $390,000 cost of goods sold 184,000 gross profit $206,000 operating expenses 255,000 loss from operations $ (49,000) it is estimated that 20% of the cost of goods sold represents fixed factory overhead costs and that 30% of the operating expenses are fixed. because star cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
required:
a. prepare a differential analysis, dated january 21 to determine whether star cola should be continued (alternative 1) or discontinued (alternative 2). refer to the lists of labels and amount descriptions for the exact wording of the answer choices for text entries. for those boxes in which you must enter subtracted or negative numbers use a minus sign. if there is no amount or an amount is zero, enter "0". a colon (: ) will automatically appear if required.
b. should star cola be retained? explain.