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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 Income Statement For the

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
Line Item Description Hats Gloves Socks
Sales $64,000 $88,400 $27,500
Cost of goods sold (26,000) (32,700) (15,700)
Gross profit $38,000 $55,700 $11,800
Selling and administrative expenses (30,000) (35,700) (15,200)
Operating income (loss) $8,000 $20,000 $(3,400)

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.

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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

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