Acondensed income statement by product line for healthy beverage inc. indicated the following for fruit cola for the past year: sales $12,750,000 cost of goods sold 8,500,000 gross profit $ 4,250,000 operating expenses 6,000,000 loss from operations $ (1,750,000) it is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. because fruit cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. prepare a differential analysis dated january 5 to determine whether fruit cola should be continued (alternative 1) or discontinued (alternative 2). if an amount is zero, enter "0". use a minus sign to indicate a loss. differential analysis continue fruit cola (alt. 1) or discontinue fruit cola (alt. 2) january 5 continue fruit cola (alternative 1) discontinue fruit cola (alternative 2) differential effect on income (alternative 2) revenues $ $ $ costs: variable cost of goods sold variable operating expenses fixed costs income (loss) $ $ $ b. should fruit cola be retained?

answer; comparing the additional benefits and costs;

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.