Suppose Grainy Day 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 Grainy Day 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 $ 7,500,000 Less: Variable expenses 4,980,000 Contribution margin $ 2,520,000 3,070,000 Less: Fixed expenses $ (550,000) Operating income (loss) Prepare an incremental analysis to show how the discontinued yummy pebbles product line will affect Grainy Day's operating income. (Enter a "0" in an input box if there is no expected change as a result of discontinuing yummy pebbles.) Incremental Analysis for Discontinuation Decision Total Contribution margin lost if yummy pebbles is discontinued Loss: Fixed cost savings if yummy pebbles is discontinued Operating income if yummy pebbles is discontinued e? arenthe bution mar - 0 Data Table S Sales revenue $ 7,500,000 6,550,000 Less: Cost of goods sold Gross profit 950,000 1,500,000 analysis to sh d change as Less: Operating expenses rating ind $ (550,000) Operating income (loss) cal Analysis f if yummy peb Print Done s if yummy pel if yummy pebbles is discontinued Jarenthe ution mard A - 1 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 yummy pebbles 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. nalysis chan al Anal Print Done if yumn if yummy pe if yummy pebbles is discontinued