his decision:

$($Click the icon to view the analysis.$)$

Total fixed costs will not change if the company stops selling laminate flooring.

Read the requirements.

Explain. $($Enter a $"0"$ in an input field if there is no expected change as a result of discontinuing the laminate flooring product in this scenario.$)$

Incremental Analysis for Discontinuation Decision

Contribution margin lost if laminate flooring product line is dropped

Les$5$: Fixed cost savings if laminate flooring product line is dropped

Operating income

if laminate flooring is dropped

Total

Requirements

Prepare an incremental analysis to show whether California Flooring should discontinue the laminate flooring

product line. Will discontinuing laminate flooring add $$30,000$ to operating income? Explain.

Assume that the company can avoid $$33,000$ 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.

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$?$

Data table