Question

# The condensed product-line income statement for Rhinebeck Company for the month of October is as follows:...

The condensed product-line income statement for Rhinebeck Company for the month of October is as follows:

 Rhinebeck Company Product-Line Income Statement For the Month Ended October 31 Hats Gloves Mufflers Sales \$65,100 \$88,400 \$26,700 Cost of goods sold (25,400) (33,000) (14,400) Gross profit \$39,700 \$55,400 \$12,300 Selling and administrative expenses (29,600) (33,900) (15,800) Operating income (loss) \$10,100 \$21,500 \$(3,500)

Fixed costs are 15% of the cost of goods sold and 40% of the selling and administrative expenses. Rhinebeck Company assumes that fixed costs would not be materially affected if the Gloves line were discontinued.

a. Prepare a differential analysis dated October 31 to determine if Mufflers 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) Mufflers October 31 Continue Mufflers (Alternative 1) Discontinue Mufflers (Alternative 2) Differential Effects (Alternative 2) Revenues \$fill in the blank 42af44f9f036f9d_1 \$fill in the blank 42af44f9f036f9d_2 \$fill in the blank 42af44f9f036f9d_3 Costs: Variable cost of goods sold fill in the blank 42af44f9f036f9d_4 fill in the blank 42af44f9f036f9d_5 fill in the blank 42af44f9f036f9d_6 Variable selling and admin. expenses fill in the blank 42af44f9f036f9d_7 fill in the blank 42af44f9f036f9d_8 fill in the blank 42af44f9f036f9d_9 Fixed costs fill in the blank 42af44f9f036f9d_10 fill in the blank 42af44f9f036f9d_11 fill in the blank 42af44f9f036f9d_12 Profit (Loss) \$fill in the blank 42af44f9f036f9d_13 \$fill in the blank 42af44f9f036f9d_14 \$fill in the blank 42af44f9f036f9d_15

b. Should the Mufflers line be retained?

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