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Suppose Wheatum is considering discontinuing its oatsie ohs product line. Assume that during the past year, the oatsie ohs' product line income statement showed the following: E: (Click the icon to view the income statement data.) i (Click the icon for additional information. If the company decides to discontinue the product line, what will happen to the company's operating income? Should Wheatum discontinue the oatsie ohs product line? Begin by preparing a contribution margin income statement for the oatsie ohs' product line. (Use a minus sign or parentheses to enter a loss.) Sales revenue $ i Data Table - X 1 7,400.000 3045000 4355000 3,045,000 More Info Less: Variable expenses Contribution margin Less: Fixed expenses MOI (1310000) Sales revenue $ Operating income (loss) 7,400,000 6,450,000 Less: Cost of goods sold Gross profit Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the oatsie ohs line is just one of the company's cereal operations, only $760,000 of direct fixed costs (the majority of which is advertising) will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by the company. Less: Operating expenses 950,000 1,550,000 (600,000) $ Operating income (loss) Print Done Print Done

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