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

Line Item Description	Hats	Gloves	Socks
Sales	$65,800	$90,300	$27,400
Cost of goods sold	(26,800)	(32,900)	(15,000)
Gross profit	$39,000	$57,400	$12,400
Selling and administrative expenses	(28,800)	(34,300)	(16,100)
Operating income (loss)	$10,200	$23,100	$(3,700)

Fixed costs are 12% of the cost of goods sold and 37% 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 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.

Line Item Description	Continue Socks (Alternative 1)	Discontinue Socks (Alternative 2)	Differential Effects (Alternative 2)
Revenues		0
Costs:	0	0	0
Variable cost of goods sold		0
Variable selling and admin. expenses		0
Fixed costs			0
Profit (Loss)