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: (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 Texas Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $26,000 to operating income? Explain. Discontinuing laminate flooring will cause operating income to Requirements 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 $30,000 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? Print Done Data table Texas Flooring Product Line Contribution Margin Income Statement For the Year Product lines Wood flooring Laminate flooring Company Total Sales revenue $ 300,000 $ 134,000 $ 434,000 Less: Variable expenses Contribution margin 156,000 90,000 246,000 144,000 $ 44,000 $ 188,000 Less fixed expenses: Manufacturing 79,000 59,000 138,000 50,000 11,000 61,000 Marketing and administrative 15,000 $ (26,000) $ (11,000) Operating income (loss) Print Done