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 $64,800 $88,500 $27,000 Cost of goods sold (25,300) (33,800) (13,900) Gross profit $39,500 $54,700 $13,100 Selling and administrative expenses (29,400) (34,100) (15,400) Operating income (loss) $10,100 $20,600 $(2,300) Fixed costs are 12% of the cost of goods sold and 44% 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 on. If required, use a minussion 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 Foxed costs Prons Yes NO 5 Mutterne be retained