i Data Table X Sales revenue $ 7,550,000 6,100,000 Less: Cost of goods sold Gross profit 1,450,000 1,500,000 Less: Operating expenses $ (50,000) Operating income (loss) Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the fruit and nuts line is just one of the company's fruit operations, only $775,000 of direct fixed costs (the majority of which is advertising) will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by the company. Suppose Smiley O is considering discontinuing its fruit and puts product line. Assume that during the past year, the fruit and nuts product line income statement showed the following (Click the icon to view the income statement data) Click the icon for additional information If the company decides to discontinue the product line what will happen to the company's operating income? Should Smiley O discontinue the fruit and nuts product line? Begin by preparing a contribution margin income statement for the fruit and nuts product line. (Use a minus sign or parentheses to enter a loss) Sales revenue $ 550 000 Less Variable expenses 4.710.000 Contribution margin $ 2,840.000 Loss Forced expenses 2 890 000 (50,000) Operating income (loss) Prepare an incremental analysis to show how the discontinued fruit and nuts product line will affect Smiley O's operating income (Enter a "o" in an input box if there is no expected change as a result of discontinuing fruit and nuts) Prepare an incremental analysis to show how the discontinued trust and nuts product line will affect Smiley O's operating income (Enter a "0"in an input box if there is no expected change as a result of discontinuing fruit and nuts) Incremental Analysis for Discontinuation Decision Total Contribution margin lost if fruit and nuts is discontinued Less Fixed cost savings if fruit and nuts is discontinued Operating income lost if fruit and nuts is discontinued