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:

View the income statement data.

View the 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$)$

Prepare an incremental analysis to show how the discontinued special oats product line will affect Grainy Day's operating income. $($Enter a $"0"$ in an input field if there is no expected change as a result of discontinuing special oats.$)$

Incremental Analysis for Discontinuation Decision

Total

Contribution margin lost if special oats is discontinued

Less: Fixed cost savings if special oats is discontinued

Operating income

if special oats is discontinued

If Grainy Day discontinued the special oats product line, it will income. Therefore, Grainy Day discontinue this product line.