P26-2A The following operating income data of Sea Cuisine highlights the losses of the fresh seafood product line: Product Line Fresh Frozen Total Seafood Seafood Sales revenue Cost of goods sold: $857,500 $227,500 $630,000 Variable $164,000 $ 64,000 $100,000 Fixed 131,000 41,000 90,000 Total cost of goods sold. 295,000 105,000 190,000 Gross profit... 562,500 122,500 440,000 Marketing and administrative expenses: Variable. 378,000 108,000 270,000 Fixed. 129,500 49,500 80.000 Total marketing and administrative 507,500 157,500 350,000 $ 55,000 $(35,000) $ 90,000 expenses Operating income (loss). Sea Cuisine is considering discontinuing the fresh seafood product line. The company's accountants estimate that dropping the fresh seafood line will decrease fixed cost of goods sold by $32,000 and decrease fixed marketing and administrative expenses by $15,000. Required 1. Prepare an incremental analysis to show whether Sea Cuisine should drop the fresh seafood product line. 95 2. Prepare a total analysis to show Sea Cuisine's operating income with and without the fresh seafood product line. Prepare the income statement in contribution-margin format. 3. Explain the difference between correct analysis and incorrect analysis of the decision to keep or drop the fresh seafood product line.