Question 3 10 Marks 25 Minutes Arial Inc. prepared monthly operating income for the month of April below. Additional information related to the month was as follows. Line A Line B Line C Sales un 83,000 $ 125,000 $ 200,000 Variable Costs 55,000 86,000 116,000 Contribution Margin 24,000 39,000 84,000 Direct Fixed Expenses 25,000 38,000 60,000 Line Segment Margin 1,000 1,000 24,000 Allocated Fixed Expenses 5,000 6,000 10,000 -6,000 -5,000 14,000 1. 75% of all direct fixed expenses are avoidable if a line is discontinued. 2. Arial allocates common fixed expenses to each line on the basis of sales dollars. Allocated fixed expenses are unavoidable. 3. The controller for the company estimated that discontinuing line A would result in a 10% increase in Line C sales, and discontinuing Line B would result in a 15% increase in Line C sales. 4. April results are representative of what a typical month for the company's operations look like. REQUIRED A) Calculate the net benefit or loss of discontinuing line A. Use incremental analysis (do not use an income statement). B) Calculate the net benefit or loss of discontinuing line B. Use incremental analysis (do not use an income statement). C) Which line should the company discontinue? Briefly explain