1. 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
   	Hats			Gloves			Mufflers
   Sales	$65,800			$89,500			$26,400
   Cost of goods sold	(25,600)			(32,900)			(15,200)
   Gross profit	$40,200			$56,600			$11,200
   Selling and administrative expenses	(29,100)			(35,500)			(15,500)
   Operating income (loss)	$11,100			$21,100			$(4,300)

   Fixed costs are 14% of the cost of goods sold and 42% 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 6d4155f8a01201f_1	$fill in the blank 6d4155f8a01201f_2	$fill in the blank 6d4155f8a01201f_3
   Costs:
   Variable cost of goods sold	fill in the blank 6d4155f8a01201f_4	fill in the blank 6d4155f8a01201f_5	fill in the blank 6d4155f8a01201f_6
   Variable selling and admin. expenses	fill in the blank 6d4155f8a01201f_7	fill in the blank 6d4155f8a01201f_8	fill in the blank 6d4155f8a01201f_9
   Fixed costs	fill in the blank 6d4155f8a01201f_10	fill in the blank 6d4155f8a01201f_11	fill in the blank 6d4155f8a01201f_12
   Profit (Loss)	$fill in the blank 6d4155f8a01201f_13	$fill in the blank 6d4155f8a01201f_14	$fill in the blank 6d4155f8a01201f_15

   b. Should the Mufflers line be retained?

   YesNo