The condensed product-line income statement for Rhinebeck Company for the month of October is as follows:

Fixed costs are 20% of the cost of goods sold and 30% of the selling and administrative expenses. Rhinebeck Company assumes that fixed costs would not be materially affected in 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).

B. Should the Mufflers line be retained? Explain

Rhinebeck Company Product-Line Income Statement For the Month Ended October 31