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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

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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 folowing analyses to help make this decision (Click the icon to view the analysis) Total food costs will not changed the company stops seling laminate flooring Read the fequirements Requirement 1. Prepare an incremental analysis to show whether Texas Flooring should discontinue the laminate flooring product line will discontinuing te flooring add $28.000 to operating income? Explan (Enter a 'o' 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 Total Data Table X Contribution margin lost if laminate flooring product line is dropped Less Fixed cost savings of laminate flooring product line is dropped Operating income Iganod ir kaminate flooring is dropped Texas Flooring Product Line Contribution Margin income Statement For the Year Product lines Wood flooring Laminate flooring Company Total Sales revenue $ 306 000 $ 124 000 $ 151 000 Less Variable expenses 36.000 237 000 Contribution margin $ 155,000 $ 38.000 199,000 Less food expenses Choose from any list or enter any number in the input fields and then click Check Answg Manufacturing 79.000 55,000 134000 54,000 11 000 05 000 parts Marketing and administrative $ remaining 22.000 $ (28,000) 16 0001 Operating income foss) 1245 M ring prin 1. Prepare an incremental analysis to show whether Texas Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $28,000 to operating income? Explain. 2. Assume that the company can avoid $33,000 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

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