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 seling 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 $27.000 to operating income? Explain (Enter a ' in an input field if there is no expected change as a result of discontinuing the laminate flooring product in this scenano) Incremental Analysis for Discontinuation Decision Total Contribution margin lost it laminate flooring product line is dropped Less Fixed cost savings at laminate flooring product line is dropped Operating income it laminate flooring is dropped Decision Vincur to conclude that dropping laminate flooring would add $27.000 to operating income If the company discontinues the laminate flooring product line, foed expenses allocated to laminate Mooring Requirement 2. Assume that the company can avoid $31.000 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 (Entera in an input field at there is no expected change 39 a result of discontinuing the laminate flooring in this scenario Choose from any list or enter any number in the input fields and then continue to the next question 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 em Click the icon to view the analysis) Totalfixed costs will not change if the company stops selling laminate flooring Read the requirements Requirement 2. Assume that the company can avoid 531,000 of fived expenses by discontinuing the laminate flooring product line (these costs are direct fixed costs of the laminate Mooring product line). Prepare an incrementat analysis to show whether the company should stop selling laminate flooring Enter a "o in an input field if there is no expected change as a result of discontinuing the laminate flooring in this scenario) Incremental Analysis for Discontinuation Decision Total Contribution margin lost if laminate flooring product line is dropped Less Foxed cost savings i laminate flooring product line is dropped Operating income laminate flooring is dropped Decision because assuming $35,000 of fixed expenses attributable to the laminate flooring product line can be avoided, the loss of the fixed cost savings contribution margin Requirements. Now, assume that all of the fixed costs assigned to laminate flooring are direct feed costs and can be avoided if the company stops Seiling laminate flooring. However marketing has concluded that wood flooring sales would be adversely affected by discontinuing the laminate flooring in retailers want to buy both from the same supplier Wood flooring production and sales would decine 10%. What should the company do? Prepare an incremental analysis Entrainininoulfed if the expected change of discontinuing the late fooning line in this scenario) Choose from any store any number in the input fields and then continue to the next question 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.) Totalted costs will not change if the company stops selling laminate flooring Read the requirements contribution margin the fixed cost savings Requirement 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 ine (retailers want to buy both from the same supplier) Wood Tooring production and sales would decline 10% What should the company do? Prepare an incremental analysis (Entor a or in an input field if there is no expected change as a result of discontinuing the laminate fooringine in nis scenario Incremental Analysis for Discontinuation Decision Total Laminate fooring contribution margin lost it caminate flooring product line is dropped Wood fooning contribution margin lost it laminate flooring produd line is dropped Loss Fixed cost savingsflaminate flooring product line dropped Operating income laminate toong is dropped Doction because, assuming that all fixed costs ass gned to the laminate flooring product ine can be avoided but that wood flooring production and sales would decline 10% the loss of contribution margin the fred cost saving Choose from any list or enter any number in the input fields and then continue to the next question Data Table N 3 On B C D 1 Texas Flooring Product Line Contribution Margin Income Statement 3 For the Year 4 Product lines Laminate Wood flooring flooring Company Total 6 Sales revenue $ 304,000 $ 134,000 $ 438.000 7 Less: Variable expenses 157.000 84.000 241,000 8 Contribution margin $ 147 000 $ 50,000 $ 197,000 9 Less fixed expenses: 10 Manufacturing 74.000 62 000 136,000 11 Marketing and administrative 59.000 15,000 74,000 $ 12 Operating income (loss) 14000 S (27.000) $ (13000) Print Done X - Requirements 1. Prepare an incremental analysis to show whether Texas Flooring should discontinue the laminate flooring product line. Will discontinuing laminate flooring add $27,000 to operating income? Explain 2. Assume that the company can avoid $31,000 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