Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 2018 Children's Shoes Men's Shoes Women's Shoes Total Sales $280,000 $300,000 $500,000 $1,080,000 Costs of goods sold: Variable costs Fixed costs $(135,000) $(150,000) (45,000) (60,000) $(180,000) $(210,000) $100,000 $90,000 $(220,000) $(505,000) (120,000) (225,000) $(340,000) $(730,000) $160,000 $350,000 $(100,000) $(45,000) $(95,000) $(240,000) Total cost of goods sold Gross profit Selling and administrative expenses: Variable selling and admin. expenses Fixed selling and admin. expenses Total selling and admin. expenses Operating income (loss) (30,000) (20,000) (25,000) (75,000) $(130,000) $(65,000) $(120,000) $(315,000) $(30,000) $25,000 $40,000 $35,000 a. Prepare a differential analysis to determine the flaw in the general manager's decision. If an amount is zero, enter "O". If required, use a minus sign to indicate a loss. Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Children's Shoes November 30 Continue Discontinue Children's Shoes Children's Shoes Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Profit (Loss) b. What is the flaw in the decision to discontinue Children's Shoes, if it is assumed fixed costs would not be materially affected by the discontinuance? If the children's Shoes are discontinued, the company's loss would by $