Continue/Discontinue For the past year, WoolCorp has experimented with its third product, extra-thick rug yarn. The company wishes to consider whether to continue or discontinue manufacturing and selling this product. You decide to prepare a differential analysis of the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete the differential analysis. WoolCorp Condensed Income Statement For the Year Ended December 31, 2018 Raw Wool Wool Yarn Rug Yarn Total Company Sales $200,000 $155,000 $187,000 $542,000 Costs of goods sold: Variable costs $(48,000) $(18,600) $(37,180) $(103,780) Fixed costs (32,000) (12,400) ho (24,780) (69,180) Total cost of goods sold $(80,000) $(31,000) $(61,960) $(172,960) Gross profit $120,000 $124,000 $125,040 $369,040 Operating expenses: Variable expenses $(5,000) $(7,750) $(53,130) $(65,880) Fixed expenses (89,000) (77,000) (106,200) (272,200) Total operating expenses $(94,000) $(84,750) $(159,330) $(338,080) Operating income (loss) $26,000 $39,250 $(34,290) $30,960 Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 2018 Continue Rug Yarn Discontinue Rug Yarn Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable Fixed Profit (loss)