Top managers of Rhode Island 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 EE (click the icon to view the analysis.) Total fixed costs will not change if the c any stops selling laminate floorin Data Table 6 Requirements Rhode Island Flooring Product Line Contribution Margin Income Statement For the Year 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. Assume that the company can avoid $23,000 of foxed 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 2. Product lines Wood flooring Laminate flooring Company Total 3. Now, assume that all of the fixed costs assigned to laminate flooring are direct fixed costs and can be 301,000 153,000 Sales revenue Less. Variable expenses Contribution margin Less fixed expenses 136,000 $ 86,000 50,000 $ 437,000 239,000 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? 148,000 $ 198,000 Print Done Marketing and administrative Operating income (loss) 78,000 59,000 11,000 $ 55,000 17,000 (22,000) S 133,000 76,000 (11,000) Clear All Check