Top managers of Pennsylvania 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. Requirement 1. Prepare an incremental analysis to show whether Pennsylvania Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $30,000 to operating income? Explain. Discontinuing laminate flooring will cause operating income to Data table Pennsylvania Flooring Product Line Contribution Margin Income Statement For the Year Product lines Wood flooring Laminate flooring Company Total Sales revenue $ 301,000 $ 132,000 $ 433,000. Less: Variable expenses 158,000 84,000 242,000 Contribution margin $ 143,000 $ 48,000 $ 191,000 Less fixed expenses: Manufacturing 71,000 59,000 130,000 Marketing and administrative 52,000 19,000 71,000 S 20,000 $ Operating income (loss) (30,000) $ (10,000) Requirements laminate flooring product line. Will discontinuing laminate flooring add $30,000 to operating incom Explain. 2. Assume that the company can avoid $31,000 of fixed expenses by discontinuing the laminate floo 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 avoided if the company stops selling laminate flooring. However, marketing has concluded that wo flooring sales would be adversely affected by discontinuing the laminate flooring line (retailers war buy both from the same supplier). Wood flooring production and sales would decline 10%. What s the company do?