Top managers of California Flooring are alarmed by their operating losses. They are considering dropping the laminate flooring product line. Company accountants have prepared the following analysis to help make this decision:

#E (Click the icon to view the analysis.)

Total fixed costs will not change if the company stops selling laminate flooring.

Read the requirements

Requirement 3. Now, assume that all of the fixed costs assigned to laminate flooring are direct fixed costs and can be avoided if the company stops selling laminate flooring. However, marketing ha concluded that wood flooring sales would be adversely affected by discontinuing the laminate flooring line (retailers want to buy both from the same supplier). Wood flooring production and sales would decline 10%. What should the company do?

Prepare an incremental analysis. (Enter a "0" in an input field if there is no expected change as a result of discontinuing the laminate flooring line in this scenario.)

Incremental Analysis for Discontinuation Decision

Laminate flooring contribution margin lost if laminate flooring product line is dropped

Wood flooring contribution margin lost if laminate flooring product line is dropped

Total

48000

Less: Fixed cost savings if laminate flooring product line is dropped

Operating income

gained

if laminate flooring is dropped

anatysis to help make this docision: III (Cick the icon to view the araysis) Total fred costs will not chenge fithe compary stops seling taminate fooring. Read the requirements margin the fread cost savings Requirement 3. Now, assume that alt of the foed costs assigned so laminete fooring are died fixed costr and can be avoided tr the company stops seting laminate floering. Howrvec, marketing h would dectioe 10%. What should the sempary do? Pregare in incremental aralysh. (Enter a ' O ' in an input fiels it there is no expected change as a result of discontinung the larrinate floorisg line in thas noenario) Data table