WoolCorp buys sheep's wool from farmers. The company began operations in January of this year, and is making decisions on product offerings, pricing, and vendors. The company is also examining its method of assigning overhead to products. You've just been hired as a production manager at WoolCorp Currently WoolCorp makes three products: (1) raw, clean wool to be used as stuffing or insulation, (2) wool yarn for use in the textile industry, and (3) extra-thick yarn for use in rugs. Upper management would like your recommendations regarding a production decision regarding their current and proposed product lines. For the past year, WoolCorp has experimented with its third product, extra-thick rug yarn. The company wishes to consider whether to continue or discontinue manufacturing and selling this product. You decide to prepare a differential analysis of the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete the differential analysis WoolCorp Condensed Income Statement For the Year Ended December 31, 20Y8 Wool Yarn Raw Wool Rug Yarn Total Company 2 Sales 200,000.00 155,000.00 197,000.00 $552,000.00 Cost of goods sold: 48,000.00 18,600.00 $37,160.00 $103,760.00 Variable costs 32,000.00 12,400.00 24,800.00 69,200.00 5 Fixed costs 80,000.00 31,000.00 $61,960.00 $172,960.00 Total cost of goods sold 120,000.00 124,000.00 $135,040.00 379,040.00 7Gross profit 8 Operating expenses: 5,000.00 $7,750.00 $53,110.00 65,860.00 9 Variable expenses 272,700.00 89,000.00 77,500.00 106,200.00 10 Fixed expenses 94,000.00 $85,250.00 $159,310.00 $338,560.00 1otal operating expenses 26,000.00 38,750.00 $24,270.00) 40,480.00 12 Income (loss) from operations Complete the following table using the data in the preceding income statement to compare the effects of dropping the rug yarn line of products. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If an amount is zero, enter 0. Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 20YS Discontinue Differential Effect Continue Rug Yam Rug Yarn on Income Alternative 1) (Alternative 2) (Alternative 2) 2 Revenues 3 Costs: Variable Fixed Income (loss)