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 $65,100 $89,800 $26,200 Cost of goods sold (26,200) (32,800) (15,500) Gross profit $38,900 $57,000 $10,700 Selling and administrative expenses (29,600) (35,100) (15,000) Operating income (loss) $9,300 $21,900 $(4,300) Fixed costs are 17% of the cost of goods sold and 45% 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 0 Variable selling and admin. expenses 0 X Fixed costs poul 0 Profit (Loss)