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Top managers of Georgia Floon ng are alarmed by their operating losses. They are considering droparg the laminate flooring product line. Compary accountants have to help this Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling laminate flooring Read the regirements orre be Requirement 1. Prepare an incremental analysis to show whether Georgia Flooring should discontinue the laminate flooring product line. Wil discontinuing laminate flooring add 516,000 to operating income? Explain (Enter a "U" in an input field it there is no expected change as a result of discontinuing the laminate flooring product in this scenano) Incremental Analysis for Discontinuation Decision Total Contribution margin lost it laminate flooring product line is dropped Less Fixed cost savingai laminate flooring product line is dropped Operating income if laminate flooring is dropped > Data table 3 3 For the Year 4 5 6 Sales revenue Product lines Laminate Wood flooring flooring Company Total $ 304,000 $ 132,000 $ 436,000 158,000 76,000 234,000 $ 146,000 $ 56,000 $ 202.000 $ 7 Less: Variable expenses 8 Contribution margin 9 Less fixed expenses: 10 Manufacturing 11 Marketing and administrative 12 Operating income (loss) 77,000 138,000 61,000 11,000 59,000 70,000 $ 10.000 $ (16000) $ (6.000) Requirements 1. Prepare an incremental analysis to show whether Georgia Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $16,000 to operating income? Explain. 2. Assume that the company can avoid $20,000 of fixed expenses by discontinuing the laminate flooring product line (these costs are direct fixed costs of the laminate flooring product line). Prepare an incremental analysis to show whether the company should stop selling laminate flooring 3. Now, assume that all of the fixed costs assigned to laminate flooring are direct fixed costs and can be avoided if the company stops selling laminate flooring. However, marketing has concluded that wood flooring sales would be adversely affected by discontinuing the laminate flooring line (retailers want to buy both from the same supplier). Wood flooring production and sales would decline 10% What should the company do? Print Done