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 Sales Cost of goods sold Gross profit Selling and administrative expenses Operating income (loss) Revenues Costs: Hats Line Item Description $65,700 (26,900) $38,800 (29,400) $9,400 Gloves Fixed costs are 16% of the cost of goods sold and 42% of the selling and administrative expenses. Northern Lights Company assumes that fixed costs would not be materially affected if the Socks line were discontinued. Variable cost of goods sold Variable selling and admin. expenses $89,400 (32,500) $56,900 (35,600) $21,300 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 August 31 Socks $26,100 (15,600) $10,500 (15,000) $(4,500) Continue Discontinue Socks Socks (Alternative 1) (Alternative 2) (Alternative 2) Differential Effects

Northern Lights Company Product-Lipe Income Statement Fnr the Manth Fnded Auaust 31 Fixed costs are 16% of the cost of goods sold and 42% of the selling and administrative expenses. Northern Lights Company assumes that fixed costs would not be materialiy affected if the socks line were discorninued. 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 foss. a. Prepare a differential analysis dated August 31 to determine if Socks should be continued (Alternative 1 ) or discontinued (Aiternative 2). If an amount is zero, enter 0, If required, use a minus sign to indicate a loss