Hats Gloves Mufflers $65,900 Sales Cost of goods sold Gross profit (26,400) $88,900 (32,400) $56,500 $27,900 (14,600) $13,300 (14,400) $(1,100) $39,500 (29,700) $9,800 Selling and administrative expenses (35,900) Operating income (loss) $20,600 Fixed costs are 16% of the cost of goods sold and 42% 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) b. Should the Mufflers line be retained? No