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eBook 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

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eBook 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 Socks Sales $65,100 $89,400 $26,400 Cost of goods sold (25,800) (32,000) (15,200) Gross profit 139,300 $56,600 $11,200 Selling and administrative expenses (29,300) (35,100) (15,000) Operating income (loss) $10,000 $21,500 $(3,000) Fixed costs are 13% of the cost of goods sold and 43% of the selling and administrative expenses. Northern Lights Company assumes that fixed costs would not be materially affected if the Socks The were discontinued. a. Prepare a differential analysis dated August 31 to determine if Socks should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Socks Line Item Description August 31 Continue Socks Revenues Costs Variable cost of goods sold Variable selling and admin, expenses Fixed costs Profit (Loss) Discontinue Socks Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) 0000 0000 0000

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