Hats Mufflers 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 Gloves Sales $65,300 $90,000 $27,000 Cost of goods sold (25,900) (32,600) (15,400) Gross profit $39,400 $57,400 $11,600 Selling and administrative expenses (29,900) (34,900) (16,40d) Operating Income (loss) $9,500 $22,500 $(4,800) Fixed costs are 17% of the cost of goods sold and 38% of the selling and administrative expenses. Rhinebeck Company assumes that fixed costs would not be materially affected if the Gloves line were discontinued. 2. 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 "o". 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 (Alternative 1) (Alternative 2) (Alternative 2) Mufflers Effects Operating income (loss) $9,500 $22,500 $(4,800) Fixed costs are 17% of the cost of goods sold and 38% 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 "O", 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 27.000 27,000 Costs: Variable cost of goods sold Variable selling and admin. expenses 0 0 Fixed costs Profit (Loss) b. Should the Mufflers line be retained