Top managers of Georgia 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 (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling laminate flooring Read the requirements Requirement 1. Prepare an incremental analysis to show whether Georgia Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $31,000 to operating income? Explain. (Enter a "o" in an field if there is no expected change as a result of discontinuing the laminate flooring product in this scenario.) Incremental Analysis for Discontinuation Decision Contribution margin lost if laminate flooring product line is dropped Less: Fixed cost savings if laminate flooring product line is dropped Total 44.000 S lost S Operating income 44.000 if laminate flooring is dropped Decision: Do not drop laminate flooring product line. It is incorrect to conclude that dropping laminate flooring would add $31,000 to operating income. If the company discontinues the laminate flooring product line, it will still incur fixed expenses allocated laminate flooring Requirement 2. Assume that the company can avoid $36,000 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 analys show whether the company should stop selling laminate flooring. (Enter a "0" in an input field if there is no expected change as a result of discontinuing the laminate flooring in this scenario.) Incremental Analysis for Discontinuation Decision Total Contribution marain lost if laminate flooring product line is dropped Choose from any list or enter any number in the input fields and then click Check Answer. Help Me Solve This Video Get More Help Clear All Check An $ 44,000 Operating income losi if laminate flooring is dropped Decision: Do not drop laminate flooring product line It is incorrect to conclude that dropping laminate flooring would add $31,000 to operating income. If the company discontinues the laminate flooring product line, it will still incur fixed expenses allocated to laminate flooring Requirement 2. Assume that the company can avoid $36,000 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. (Enter a "o" in an input field if there is no expected change as a result of discontinuing the laminate flooring in this scenario.) Incremental Analysis for Discontinuation Decision Total Contribution margin lost if laminate flooring product line is dropped Less: Fixed cost savings if laminate flooring product line is dropped Operating income if laminate flooring is dropped Choose from any list or enter any number in the input fields and then click Check Answer. Help Me Solve This Video Get More Help Clear All Check Answer Homework: Chapter 8 Homework Part 4 of 7 Questir Data Table Top managers of Georgia Flooring are alarmed by their operating losses. They are considering dropping the laminate floorin (Click the icon to view the analysis.) A B D - X Requirements 1 Georgia Flooring Product Line Contribution Margin Income Statement 2 3 For the Year 4 5 1. Prepare an incremental analysis to show whether Georgia Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $31,000 to operating income? Explain. 2. Assume that the company can avoid $36,000 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? 6 Sales revenue Product lines Laminate Wood flooring flooring Company Total S 301.000 S 122,000 $ 423,000 159,000 78,000 237,000 $ 142,000 $ 44,000 $ 186,000 7 Less: Variable expenses 8 Contribution margin 9 Less fixed expenses: Manufacturing 11 Marketing and administrative 12 Operating Income (loss) 10 62.000 134,000 Print 72,000 52,000 13,000 65,000 Print Done $ 18,000 $ (31,000) $ (13,000) Operreng OTG Trainer My Toppeu hoose from any list or enter any number in the input fields and then click Check Answer. Print Done Help Me Solve This Video Get More Help OTOCI VILA RIQW
