Hats Gloves Socks Sales $66,000 $89,900 $27,700 Cost of goods sold (26,200) (33,000) (14,000) Gross profit $39,800 $56,900 $13,700 Selling and administrative expenses (30,100) (35,900) (15,300) Operating income (loss) $9,700 $21,000 $(1,600) Fixed costs are 15% of the cost of goods sold and 45% of the selling and administrative expenses. Northern Lights Company assumes that fixed costs would not be materially affected if the Socks line 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 Discontinue Socks Differential Effects Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs (Alternative 1) (Alternative 2) (Alternative 2) 000 000 000