Differential Analysis for a Discontinued Product

The condensed product$-$line income statement for Northern Lights Company for the month of August is as follows:

Northern Lights Company

Product$-$Line Income Statement

For the Month Ended August $31$

Hats Gloves Socke Sales $65,60089,30027,600$cosst of goods sold$(26,400)(33,400)(15200$

gross proft $39,20055,90012,400$

Selling snd administrstive expenses

$(30,300)(35,000)(14,000)$Operating income $($loss $8,90020,900(2,000)$

Fixed cost are $12\%$ of the cost of goods sold and $45\%$ of the selling and administrative expenses. Nother Lighte company assumes thst fixed cost would not be materially effected if the socks line were discontinued

a prelare a differential analysis dated august $31$ to determine if socks should be continued $($alt$.1)$ or discontinued $($alt $2)$

differencial analysis continue $($alt $1)$ or discontinued $($alt $2)$ socks

August $31$

Revenues

Cost

Variable cost of goods sold

Variable selling and admin expenses

Fixed cost

Profit loss