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Suppose Tasty Tart is considering discontinuing its tasty loops product line. Assume that during the past year, the tasty loops' product line income statement showed the following: (Click the icon to view the income statement data.) (Click the icon for additional information.) More Info If the company decides to discontinue the product line, what will happen to the company's operating income? Should Tasty Tart discontinue the tasty loops product line? Begin by preparing a contribution margin income statement for the tasty loops' product line. (Use a minus sign or parentheses to enter a loss.) 7550000 4305000 Sales revenue Less: Variable expenses Contribution margin Less: Fixed expenses Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the tasty loops fine is just one of the company's cereal operations, only $725,000 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 3245000 1845000 Print Done 1400000 Operating income (loss) Prepare an incremental analysis to show how the discontinued tasty loops product line will affect Tasty Tart's operating income. (Enter a "0" in an input field if there is no expected change as a result of discontinuing tasty loops) Incremental Analysis for Discontinuation Decision Contribution margin lost if tasty loops is discontinued Less: Fixed cost savings if tasty loops is discontinued Operating income lost if tasty loops is discontinued Total 3245000 725000 X Data Table 2520000 discontinue this product line. If Tasty Tart discontinued the tasty loops product line, it will gain income. Therefore, Tasty Tart should B 5 7.550.000 6,150,000 1.400.000 1 Sales revenue 2 Less: Cost of goods sold 3 Gross profit 4 Less: Operating expenses 5. Operating income (loss) 1.500.000 (100.000 S Print Done to the next