Suppose Better Harvest is considering discontinuing its bran flakes product line. Assume that during the past year, the bran flakes' product line income statement showed the following: Click the icon to view the income statement data. O 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 bran flakes product line? Begin by preparing a contribution margin income statement for the bran flakes' product line. (Use a minus sign or parentheses to enter a loss.) Sales revenue Less: Variable expenses Contribution margin Less: Fixed expenses Operating inoome (loss) Prepare an incremental analysis to show how the discontinued bran flakes product line will affect Better Harvest's o $ 5,300,000 4,895,000 $405,000 3,005,000 $ (2,600,000) income. Enter a "O. in an input box if there is no expected change as a result of discontinuing bran flakes.) Incremental Analysis for Discontinuation Decision Data Table Contribution margin lost if bran flakes is discontinued Less: Fixed cost savings if bran flakes is discontinued Operating income gained if bran flakes is discontinued $5,300,000 6,350,000 Sales revenue Less: Cost of goods sold Gross proft More Info 1,050,000) 1,550,000 Less: Operating expenses $(2,600,000) Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the bran flakes line is just one of the company's cereal operations, only $740,000 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. Operating income (loss) Print Done Final Check