Suppose Grainy Day is considering discontinuing its special oats product line. Assume that during the past year, the special oats' 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 Grainy Day discontinue the special oats product line? Begin by preparing a contribution margin income statement for the special oats' product line. (Use a minus sign or parentheses to enter a loss.) Sales revenue Less: Contribution margin Less: Operating income (loss) More info Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the special oats line is just one of the company's cereal operations, only $725,000 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. Data table 3 Gross profit 4 - 2345 1 Sales revenue A 2 Less: Cost of goods sold $ 7,500,000 6,450,000 1,050,000 4 Less: Operating expenses 1,550,000 $ 5 Operating income (loss) (500,000) Print Done - X