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 folowing analysis to help make this decision: (Click the icon to view the analysis) Total fixed costs will not change if the company stope uoling laminate flooring Read the requirements Requirement 1. Prepare an incremental analysis to show whether California Flooring should discontinue the laminate flooring product line. Wil discontinuing laminate Mooring add $28,000 to operating income? Explain Discontinuing laminate flooring will cause operating income to Decision to conclude that dropping laminate flooring would add $28.000 to operating income. If the company dincontinues the laminate flooring product line, it Incur fixed experiet allocated to laminate flooring, Requirement 2. Assume that the company can avoid 529,000 of fixed expenses by discontinuing the laminate flooring product line these conts are direct fixed cost of the laminate flooring product line). Prepare an incremental analysis to show whether the company should stop selling inminate flooring (Enter a noin an input field there is no expected change as a result of discontinuing the laminate flooring in this scenario) y Discontinuing laminate flooring and avoiding $20,000 of fixed expenses, wil onune operating income to am Decision because, anuming $25,000 of sixed expenses attributable to the faminate flooring product line can be wvolted, the loss of contribution margin the foxed cost saving ACC Requirement 3. Now, assume that all of the feed costs assigned to laminate flooring redirect fixed costs and can be avoided if the company stops selling laminate flooring. However, marketing has concluded that wood flooring sales would be adversely affected by discontinuing the laminate flooring fine 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 (Entra o in an input the special changes are of discontinuing the laminate flooring in this scenario) om .cc 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 soling laminate flooring. However, marketing has concluded that wood flooring sales would be adversely affected by dinohtinuing 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? Preparo an incremental analysis. (Enter a "o" in an input field if there in no expected change as a result of dincontinuing the laminate flooring line in this scenario) Discontinuing laminate flooring and avoiding all fixed exponnes, will cause operating income to Decision because, assuming that all fixed costs assigned to the laminate flooring product line can be avoided but that wood flooring production and sales would decline 10%, the loss of contribution margin the food cost savings Flooring are alarmed by ope analysis to help make this decision: the Data Table ang X A B D hte Be th pen that COS hter Suct mge Hoorin 5 1 California Flooring 2 Product Line Contribution Margin Income Statement 3 For the Year Product lines 4 Laminate 5 Wood flooring flooring Company Total 6 Sales revenue $ 301,000 $ 128,000 $ 429,000 158,000 82,000 240,000 7 Less: Variable expenses 8 Contribution margin 143,000 $ 46,000 $ 189,000 9 Less fixed expenses 10 Manufacturing 77,000 57,000 134,000 11 Marketing and administrative 58,000 15,000 73,000 $ 12 Operating income (loss) 8,000 $ (26,000) $ (18,000) 9 pr tributi $ any issum ceting Woo (ret analy ng lin floorin Jinec on and Print Done or enter any number in the input fields and then continue to the next question. Xing po con Requirements ar fixe Assu bring acted a e direc in an aminat 1. Prepare an incremental analysis to show whether California Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $26,000 to operating income? Explain. 2. Assume that the company can avoid $29,000 of fixed expenses by discontinuing the laminate flooring product line (these costs are direct fixed costs of the laminate flooring product line). Prepare an incremental analysis to show whether the company should stop selling laminate flooring. 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 has 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? ct line ss of cd 3. Now ver, ma supplie ps selli rs want Print Done crement this sc laminate flooring and avoiding all fixed expenses, will cause operating income to