WoolCorp 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 Woo|Corp. Currently WooiCorp makes three products: (I) raw, clean wool to be used as stufng or insulation; (2) wool yarn for use in the textile industry, and {3) extrasthick yarn for use in rugs. Upper management would like your recommendations regarding a production decision regarding their current and proposed product lines. Continue,r Discontinue For the past year, WooiCorp has experimented with its third product, extra-thick rug varn. The company wishes to consider whether to continue or discontinue manufacturing and sailing this product. You decide to prepare a differential anaiysis of the income related to all three products. To begin your analysis, you review the following condensed income statement. Then scroll down to complete we differentiai analysis. WoolCorp Condensed Income Statement For the Year Ended December 31, 20Y8 Raw Wool Wool Yarn Rug Yarn Total Company Sales $200,000 $155,000 $177,000 $532,000 Costs of goods sold: Variable costs $(48,000) $(18,600) $(37,170) $(103,770) Fixed costs (32,000) (12,400) (24,800) (69,200) Total cost of goods sold $ (80,000) $(31,000) $(61,970) $(172,970) Gross profit $120,000 $124,000 $115,030 $359,030 Operating expenses: Variable expenses $(5,000) $(7,750) $(53,100) $(65,850) Fixed expenses (89,000) (78,000) (106,200) (273,200) Total operating expenses $(94,000) $(85,750) $(159,300) $(339,050) Operating income (loss) $26,000 $38,250 $ (44,270) $19,980 Complete the following table using the data in the preceding income statement to compare the effects of dropping the rug yarn line of products. If required, use a minus sign to indicate a loss. Differential Analysis Continue Rug Yarn (Alternative 1) or Discontinue Rug Yarn (Alternative 2) December 31, 20Y8 Continue Rug Yarn (Alternative 1) Discontinue Rug Yarn (Alternative 2) Differential Effects (Alternative 2) Revenues $ $ Costs: Variable Fixed Profit (loss)Fina] Questions Answer the foliowing question {1}, then fiEI in table {2). 1. After reviewing your work on the Continue/Discontinue panel, should WooiCorp continue {Alternative 1] or discontinue (Alternative 2) the rug yarn product line? v 2. The following tabie shows several business decisions that might need to he made across the top row. Along the leftehand column, there are important factors to consider. Setect the factor{s) that are important to the decision. Select aii that apply. If the factor is not importantto any of the decisions, select "yes\" on the "Not Important" dropdown, otherwise seiect "no". Lease or Sell or Special Price Continue or Not Sell Process Further Order Make or Buy Discontinue Production Bottleneck Important Impact on reguiar prices ' ' ' ' ' ' Contribution margin per bottleneck hour ' ' ' ' ' ' Differential revenue is more than differential cost ' ' ' ' ' ' Suppiier price is iess than WooICoro's variable cost per unit ' ' ' ' ' ' Sunk costs ' ' ' V ' ' Robinson-Patman Act v v v v v v