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Khinebeck Company Product-Line Income Statement For the Month Ended October 31 Hats Gloves Mufflers Sales...

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Khinebeck Company Product-Line Income Statement For the Month Ended October 31 Hats Gloves Mufflers Sales $64,000 $90,300 $27,500 Cost of goods sold (25,900) (33,800) (14,700) Gross profit $38,100 $12,800 $56,500 (35,000) Selling and administrative expenses (29,200) (15,300) Operating income (loss) $8,900 $21,500 $(2,500) Fixed costs are 13% of the cost of goods sold and 41% 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 Discontinue Differential Mufflers Mufflers Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Profit (Loss) $ $

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