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Differential Analysis for a Discontinued Product The condensed product-line income statement for Rhinebeck Company for the month of October is as follows: Rhinebeck Company
Differential Analysis for a Discontinued Product 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 Sales Cost of goods sold Gross profit Selling and administrative expenses Operating income (loss)) Hats Gloves Mufflers $64,400 $88,500 $27,000 (27,300) (32,900) (15,400) $37,100 $55,600 $11,600 (29,900) (35,700) (15,300) $7,200 $19,900 $(3,700) Fixed costs are 17% of the cost of goods sold and 36% 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 Discontinue Mufflers Differential Effects (Alternative 1) (Alternative 2) (Alternative 2). Revenues Costs: Variable cost of goods sold Variable selling and admin, expenses 000 001
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