Top managers of Texas 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 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 Texas Flooring should discontinue the laminate flooring product line. Wit discontinuing laminate flooring add $20,000 to operating income? Explain (Enter a "" in an input box if there is no expected change as a result of discontinuing the laminate flooring product in this scenario) Incremental Analysis for Discontinuation Decision Contribution margine if laminate flooring product line is dropped Le: Fixed cost savings flaminate flooring product is dropped Operating income laminate flooring is dropped Total Data table Texas Flooring Requirements Product Line Contribution Margin Income Statement For the Year Products Sales revenue 300,000 $ Wood flooring Laminate flooring Company Total $ 124,000 $ 432000 150.000 80,000 230,000 150,000 $ 44,000 $ 194,000 Les fixed expenses: Manufacturing 77,000 $1,000 128,000 Marketing and administrative $6,000 18,000 75,000 $ 17,000 $ (26.000) $ 19.000) Operating income (loss) 1. Prepare an incremental analysis to show whether Texas Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $26,000 to operating income? Explain 2. Assume that the company can avoid $29,000 of foxed expenses by discontinuing the laminate fring product line (these costs are direct fixed costs of the laminate fooring product line). Prepare an incremental analysis to show whether the company should stop selling laminate flooring 3. Now assume that at of the fed costs assigned to laminate flooring are direct fad costs and can be avoided if the company stops sailing laminate flooring. However, marketing has conduded that wood flooring sales would be adversely affected by discontinuing the laminata fooring the petalers want to buy both from the same supplier). Wood flooring production and sales would decine 10%. What should the company do? Less Vrable expenses Contribution margin