The condensed product-line income statement for Rhinebeck Company for the month of October is as...
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The condensed product-line income statement for Rhinebeck Company for the month of October is as follows: A product-line income statement is shown. The statement title is Rhinebeck Company, Product-Line Income Statement, For the Month Ended October 31. There are columns for Hats, Gloves, and Mufflers. In the Hats column, Sales is $71,000, Cost of goods sold is (32,600) (set in parentheses and single-ruled), Gross profit is $38,400, Selling and administrative expenses is (27,400) (set in parentheses and single-ruled), and Operating income (loss) is $11,000 (double-ruled). In the Gloves column, Sales is $105,700, Cost of goods sold is (42,300) (set in parentheses and single-ruled), Gross profit is $63,400, Selling and administrative expenses is (42,800) (set in parentheses and single-ruled), and Operating income (loss) is $20,600 (double-ruled). In the Mufflers column, Sales is $45,000, Cost of goods sold is (27,000) (set in parentheses and single-ruled), Gross profit is $18,000, Selling and administrative expenses is (25,000) (set in parentheses and single-ruled), and Operating income (loss) is $(7,000) (set in parentheses and double-ruled).Enlarge Image Fixed costs are 20% of the cost of goods sold and 30% of the selling and administrative expenses. Rhinebeck Company assumes that fixed costs would not be materially affected if the Gloves line were discontinued. Prepare a differential analysis dated October 31 to determine if Mufflers should be continued (Alternative 1) or discontinued (Alternative 2)
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