Top managers of Rhode Island Flooring are alarmed by their operating losses. They are considering dropping the laminate fooring product line. Company accountants have prepared the Todowing analysis to help make this decision: Cack the icon to view the analysis) Total fed costs will not change if the company stops selling laminate foong Read the requirements Requirement 1. Prepare an incremental analysis to show whether Rhode Island Flooring should discontinue the laminate flooring product line will discontinung laminate flooring add $22 000 to operating income? Explain Enter an an bed if there is no expeded change as a result of discontinuing the laminate flooring product in the scenario) Incremental Analysis for Discontinuation Decision Contribution margin lost if laminate flooring product line is dropped Less Feed cost savings if laminate fooring product line is Operating income droppe flaminate toong in dropped Total Data table A 1 2 3 4 B C D Rhode Island Flooring Product Line Contribution Margin Income Statement For the Year Product lines 5 Wood flooring Laminate flooring Company Total 6 Sales revenue $ 302,000 $ 118,000 $ 420,000 7 Less: Variable expenses 159,000 82,000 241,000 8 Contribution margin $ 143,000 $ 36,000 $ 179,000 9 Less fixed expenses: 10 Manufacturing 74,000 49,000 123,000 11 Marketing and administrative 52,000 9.000 61,000 12 Operating income (loss) $ 17,000 $ (22,000) $ (5,000) I 1. Prepare an incremental analysis to show whether Rhode Island Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $22,000 to operating income? Explain 2. Assume that the company can avoid $25.000 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? Requirements a na