Save Top managers of Pennsylvania Flooring are alarmed by their operating losses. They are considering dropping the laminate flooring product line. Company accountants have prepared the following analysis to help make this decision (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling laminate flooring. Read the requirements EN 1 Requirement 1. Prepare an incremental analysis to show whether Pennsylvania Flooring should discontinue the laminate flooring product line will discontinuing laminate flooring add $28,000 to operating income? Explain (Enter a "U" in an input field it there is no expected change as a result of discontinuing the laminate flooring product in this scanaria incremental Analysis for Discontinuation Decision Total - X Data Table Contribution margin lost if laminate flooring product line is dropped Less: Fixed cost savings it laminate flooring product line is dropped Operating income it laminate flooring is dropped A B D Pennsylvania Flooring 2 Product Line Contribution Margin Income Statement 3 For the Year 4 Product lines Laminate 5 Wood flooring flooring Company Total 6 Sales revenue $ 303 000 $ 122.000 $ 425 000 7 Less: Variable expenses 154,000 82.000 236.000 8 Contribution margin $ 149,000 $ 40.000 $ 189,000 9 Less fixed expenses 10 Manufacturing 78.000 51.000 129.000 Choose from any list or enter any number in the input fields and then click. Check Ansy 11 53.000 Marketing and administrative 17,000 70 000 $ 19,000 $ (28.000 $ 10 000 12 Operating income (loss) Clear Au Check Answer Check Answer Top managers of Pennsylvania Flooring are alarmed by their operating losses. They are considering dropping the laminate flooring product line. Company accountants have prepared the following analysis to help make this decision: B (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling laminate flooring. Read the requirements. Requirement 1. Prepare an incremental analysis to show whether Pennsylvania Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $28,000 to operating income? Explain. (Enter a "0" there is no expected change as a result of discontinuing the laminate flooring product in this canaria Incremental Analysis for Discontinuation Decision Total Data Table Contribution margin lost it laminate flooring product line is dropped Less: Fixed cost savings if laminate flooring product line is dropped Operating income if laminate flooring is dropped B C D - Requirements ment 1. Prepare an incremental analysis to show whether Pennsylvania Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $28,000 to operating income? Explain. 2. 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, 3. 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? le 1 Company Total 000 $ 425.000 000 236.000 1000 189 000 Choose from any list or enter any numb 1000 000 129.000 70.000 2005 (10.000 Help Me Solve This Video Clear All Che Print Done