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The condensed product - line income statement for Northern Lights Company for the month of August is as follows: Northern Lights Company Product - Line
The condensed productline income statement for Northern Lights Company for the month of August is as follows:
Northern Lights Company
ProductLine Income Statement
For the Month Ended August
Line Item Description Hats Gloves Socks
Sales $ $ $
Cost of goods sold
Gross profit $ $ $
Selling and administrative expenses
Operating income loss $ $ $
Fixed costs are of the cost of goods sold and of the selling and administrative expenses. Northern Lights Company assumes that fixed costs would not be materially affected if the Socks line were discontinued.
Question Content Area
a Prepare a differential analysis dated August to determine if Socks should be continued Alternative or discontinued Alternative If an amount is zero, enter If required, use a minus sign to indicate a loss.
Differential Analysis
Continue Alt or Discontinue Alt Socks
August
Line Item Description Continue
Socks
Alternative Discontinue
Socks
Alternative Differential
Effects
Alternative
Revenues $Revenues
$Revenues
$Revenues
Costs:
Variable cost of goods sold Variable cost of goods sold
Variable cost of goods sold
Variable cost of goods sold
Variable selling and admin. expenses Variable selling and admin. expenses
Variable selling and admin. expenses
Variable selling and admin. expenses
Fixed costs Fixed costs
Fixed costs
Fixed costs
Profit Loss $Profit Loss
$Profit Loss
$Profit Loss
Question Content Area
b Should the Socks line be retained?
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