19.
Differential Analysis | |||
Continue(Alt 1) or Discontinue (Alt 2) Mufflers | |||
31-Oct | |||
Continue Muffles (Alternative 1 ) | Discontinue Muffles (Alternative 2) | Differential Effects (Alternative 2) | |
Revenues | $26,600 | $0 | -$26,600 |
Costs: | |||
Variable cost of goods sold | $13,552 | $0 | $13,552 |
Variable selling and admin expenses | $9,882 | $0 | $9,882 |
Fixed costs | $8,166 | $8,166 | $0 |
Profit | -$5,000 | -$8,166 | -$3,166 |
b. Yes
Because, if it is discontiuned, there is a reduction of net income by $3,166
20.
Residual income = Operating income - Minimum required rate of return x Average operating assets
= $83,400 - $398,200 x 13%
= $83,400 - $51,766
= $31,634
PLEASE HELP AND SHOW WORK, please highlight answers, THANK YOU!! 19. 20. Differential Analysis for a...
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 $71,000 $105,700 $45,000 Cost of goods sold (32,600) (42,300) (27,000) $38,400 $18,000 Gross profit Selling and administrative expenses $63,400 (42,800) $20,600 (27,400) $11,000 (25,000) Operating income (loss) $(7,000) Fixed costs are 20% of the cost of goods sold and 30% of the selling...
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 $88,700 $27,200 (26,100) (33,000) (13,900) Cost of goods sold Gross profit Selling and administrative expenses $39,700 $55,700 $13,300 (28,700) (35,200) (15,000) Operating income (loss) $11,000 $20,500 $(1,700) Fixed costs are 17% of the cost of goods sold and 44% of the selling and administrative expenses. Rhinebeck Company assumes...
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 $65,900 $90,200 $26,400 Cost of goods sold (27,300) (32,700) (13,900) Gross profit $38,600 $57,500 $12,500 Selling and administrative expenses (29,700) (35,300) (15,300) Operating income (loss) $8,900 $22,200 $(2,800) Fixed costs are 14% of the cost of goods sold and 42% of the...
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