Q2. Bakery Inc. is a small bakery looking to expand its product offerings. The company is evaluating two alternatives: pies and pastries. Annual projections for sales of pies are as follows: Sales $244,000; variable costs $60,000; fixed costs $26,000. Annual projections for sales of pastries are as follows: Sales $160,000; variable costs $50,000; fixed costs- $15,000

Required:

Perform differential analysis to determine which alternative is more profitable, and by how much. Assume that adding pies is alternative 1 and adding pastries is alternative 2.