Suppose Creamy Oat is considering discontinuing its oatsie ohs product line Assume that during the past year, the oatsie ohs' product line income statement showed the following LOADING (Click the icon to view the income statement data ) LOADING (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 Creamy Oat discontinue the oatsie ohs product line Question content area bottom Part 1 Begin by preparing a contribution margin income statement for the oatsie ohs' product line (Use a minus sign or parentheses to enter a loss ) Sales revenue Less Contribution margin Less Operating income (loss) Data table More info A B 1 Sales revenue $ 7,500,000 Fixed manufacturing overhead costs account for 40 of the cost of goods, while only 30 of the operating expenses are fixed Since the oatsie ohs line is just one of the company's cereal operations, only $775,000 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 5,900,000 1,600,000 2 Less Cost of goods sold 3 Gross profit 4 Less Operating expenses 5 Operating income (loss) 1,650 000 $ (50,000)

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Suppose Creamy Oat is considering discontinuing its oatsie ohs product line. Assume that during the past year, the oatsie ohs' product line income statement showed

Suppose

Creamy Oat

is considering discontinuing its

oatsie ohs

product line. Assume that during the past year, the

oatsie ohs'

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

Creamy Oat

discontinue the

oatsie ohs

product line?

Question content area bottom

Part 1

Begin by preparing a contribution margin income statement for the

oatsie ohs'

product line. (Use a minus sign or parentheses to enter a loss.)

Sales revenue
Less:
Contribution margin
Less:
Operating income (loss)

image text in transcribed

Data table More info A B 1 Sales revenue $ 7,500,000 Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the oatsie ohs line is just one of the company's cereal operations, only $775,000 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. 5,900,000 1,600,000 2 Less: Cost of goods sold 3 Gross profit 4 Less: Operating expenses 5 Operating income (loss) 1,650.000 $ (50,000)