Top managers of Carolina Flooring are alarmed by their operating losses. They are oonsidering dropping the larminate flooring product line. Company accountants have prepared the following analysis to help make this decision: (Click the icon to view the analysis.) Tolal fixed costs will not change if the company stops selling laminate flooring. Read the requirements. Operating incame lost Decision: Do not drop laminate flooring product line. It is incorrect to conclude that dropping laminate flooring would add $28,000 to operating income. If the company discontinues the laminate flooring product line, it will stil incur fixed expenses allacated to laminate flooring. Requirement 2. Assume that the company can avoid $31,000 of foxed expenses by discontinuing the laminate flaoring product line (these costs are direct fixed cots of the laminate fiooring product lne. Prepare an incremental analysis to show whether S 42,000 if laminate flooring is dropped the company should stop selling laminate flooring. (Enter a '0 in an input box if there is no expected change as a result of discontinuing the laminate flooring in this scenario.) Incremental Analysis for Discontinuation Decision Total S 42,000 Contrioution margin lost if laminate fooning product line is dropped Less: Fixed cost savings if larninate flooring product line is dropped Operating incomelast Decision: Do nol drop the laminate flcoring product line because, assuming S31,000 of fixed expenses attributable to the laninate llccring product Eine can be avoided, the loss of contribution margin wil still exceed the ixed cost savings. Requirement 3. Now, assurrie that all of the fixed costs assigned to lainate fooring are direct fixed costs and can be avoided if the comipany stops selling laminate flooring. However, marketirg has concluded that wood flooring sales would be adversely r laminate flooring is dropped11,000 affected by discontinuing the laminate flooring ine 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 box if there is no expected change as a result of discontinuing the laninate flooring line in this scenario.) Incremental Analysis for Discontinuation Decision Total Laminale flooring contribution rriargin lost if laminate flooring product line is dropped Wood flooring contribution margin lost if larninate flooring product line is dropped Less: Fixed cost savings if laminate flooring product line is dropped Operating income if laminate fooring is dropped Choose from any list or enter any number in the input fields and then click Check Answer 1 Data Table Carolina Flooring Product Line Contribution Margin Income Statement For the Year Product lines Wood flooring Laminate flooringCompany Total Sales revenue Less: Variable expenses Contribution margin Less fixed expenses 307,000 S$ 159,000 148,000 $ 128,000 $ 86,000 42,000 $ 435,000 245,000 190,000 75,000 50,000 23,000 $ Manufacturing 61,000 9,000 (28,000) $ 136,000 59,000 (5,000) Marketing and administrative Operating income (loss) Print Done