Suppose K-Log is considering discontinuing its fruity rings product line. Assume that during the past year, the fruity rings' product line income statement showed the following: PE (Click the icon to view the income statement data.) (Click the icon for additional information. i More Info If the company decides to discontinue the product line, what will happen to the company's operating income? Should K-Log discontinue the fruity rings p Begin by preparing a contribution margin income statement for the fruity rings' product line. (Use a minus sign or parentheses to enter a loss.) Sales revenue $ 5,350,000 4,625,000 Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the fruity rings 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. Less: Variable expenses Contribution margin Less: Fixed expenses $ 725,000 2,825,000 $ (2,100,000) Print Done Operating income (loss) Prepare an incremental analysis to show how the discontinued fruity rings product line will affect K-Log's operating income. (Enter a "0" in an input box if there is no expected change as a result of discontinuing fruity rings.) Total 0 Data Table Incremental Analysis for Discontinuation Decision Contribution margin lost if fruity rings is discontinued Less: Fixed cost savings if fruity rings is discontinued Operating income if fruity rings is discontinued $ Sales revenue Less: Cost of goods sold Gross profit 5,350,000 5,900,000 (550,000) 1,550,000 Less: Operating expenses $ (2,100,000) Choose from any list or enter any number in the input fields and then click Check Answer. Operating income (loss)