Suppose Crispy Pop is considering discontinuing its yummy pebbles product line. Assume that during the past year, the yummy pebbles' 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 Crispy Pop discontinue the yummy pebbles product line? Begin by preparing a contribution margin income statement for the yummy pebbles' product line. (Use a minus sign or parentheses to enter a loss.) Sales revenue Less: Contribution margin Less: Operating income (loss) Prepare an incremental analysis to show how the discontinued yummy pebbles product line will affect Crispy Pop's operating income. (Enter a "0" in a Total Incremental Analysis for Discontinuation Decision Contribution margin lost if yummy pebbles is discontinued Less: Fixed cost savings if yummy pebbles is discontinued Operating income if yummy pebbles is discontinued If Crispy Pop discontinued the yummy pebbles product line, it will income. Therefore, Crispy Pop discontinue this product line. X A Data Table More Info $ 7,600,000 6,550,000 Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the yummy pebbles 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. Sales revenue Less: Cost of goods sold Gross profit Less: Operating expenses 1,050,000 1,550,000 (500,000) $ Operating income (loss) Print Done Print Done