E8-23A (similar to) Top managers of New York Flooring are alarmed by their operating losses. They are considering dropping the lamin (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling laminate flooring. Read the requirements. Requirement 1. Prepare an incremental analysis to show whether New York Flooring should discontinue the lamina box if there is no expected change as a result of discontinuing the laminate flooring product in this scenario.) Total 24000 Incremental Analysis for Discontinuation Decision Contribution margin lost if laminate flooring product line is dropped Less: Fixed cost savings if laminate flooring product line is dropped Operating income lost wif laminate flooring is dropped 24000 3 of 10 (3 complete) HW Score: 20%, 2 of 10 Question Help Donsidering dropping the laminate flooring product line. Company accountants have prepared the following analysis to help make this decision: should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $24,000 to operating income? Explain. (Enter a "o in an inpl roduct in this scenario.) 4000 -4000 laminate flooring. 0 Data Table hether ng the la ision ropped dropped New York Flooring Product Line Contribution Margin Income Statement For the Year Product lines ng is drop Sales revenue Wood flooring Laminate flooring Company Total 304,000 $ 124,000 $ 428,000 155,000 78,000 233,000 149,000 $ 46,000 $ 195,000 Less: Variable expenses Contribution margin Less fixed expenses: Manufacturing 79,000 50,000 20,000 $ 53,000 17,000 132,000 67.000 (4,000) Marketing and administrative (24,000) $ Operating income (loss) Print Done ling laminate flooring. w whether New York Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $24,0 nuina tha laminate flooring product in the scando 0 Requirements Dec is do is d oorin 1. Prepare an incremental analysis to show whether New York Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $24,000 to operating income? Explain. 2. Assume that the company can avoid $29,000 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