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Suppose Better Harvest is considering discontinuing is that and muts product line Assume that the past the h ands out (Click the icon to wow the income statement data) Ock the icon for add ition the company decides to discontinue the product line what will happen to the company's operating come? Should Better Harvest scot c omes showed the long h and product line? o theses toa s ) Begin by preparing a contribution margin income statement for the fruit and product line. Use a m Sales revenue Less Contribution margin Less: Operating income foss) Prepare an incremental analysis to show how the discontinued fruit and nuts product line wil weet De Incremental Analysis for Discontinuation Decision Contribution margin lost fruit and nuts is discontinued Less: Fixed cost savings i fruit and outsis discontinued Operating income fruit and nuts is discontinued Better Harvest discontinued the trut and nuts product line, will come. Therefore, Better t d e s product line Data Table More info 5 Sales revenue Less Cost of goods sold Gross profit 7.400,000 6 200,000 Fondantcturing and costs account for 40% of the cost of goods, while only 30% of the operating expenses are found. Since the futanduslineist one of the company's operations, only 720,000 of direct feed costs the monty of which is a l will be eliminated the product line is discontinued. The remainder of the found costs will still be incumed by the company 1.200,000 Less: Operating expenses Operating income foss) por Done Print Done next question Suppose Better Harvest is considering discontinuing its fruit and nuts product line. Assume that during the past year, the fruit and 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 Better Harvest 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 Less Contribution margin Less: Operating income (loss) Penare an incremental analysis to show how the discontinued fruit and prodact line will affect Better Harvest's operating income (Enter a "O in an input box if there is no expected change as a result of discontinuing fruit and nuts) Incremental Analysis for Discontinuation Decision Contribution margin lost if fruit and nuts is discontinued Less: Foxed cost savings fruit and nuts is discontinued Operating income if fruit and nuts is discontinued If Better Harvest discontinued the fruit and nuts product line, it will income. Therefore, Better Harvest discontinue this product line, - X Data Table More info Sales revenue S 7,400,000 6.200.000 Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fred. Since the fruit and nuts line is just one of the company's fruit operations, only 5720,000 of direct fixed costs the many of which is advertising) will be eliminated the product line is discontinued. The remainder of the faced costs will still be incurred by the company Less: Cost of goods sold Gross profit Less: Operating expenses Operating income (loss) 1,200,000 1,600,000 (400,000) Done Print Done