Refer to the information for Hickory Company above. Hickory€™s management is deciding whether to keep or drop the Parquet product line. Hickory€™s parquet flooring product line has a contribution margin of $ 50,000 (sales of $ 300,000 less total variable costs of $ 250,000). All variable costs are relevant. Relevant fixed costs associated with this line include $ 30,000 in machine rent and $ 5,000 in supervision salaries.
Shown below is a segmented income statement for Hickory Company€™s three wooden flooring product lines:

Required:
1. List the alternatives being considered with respect to the parquet flooring line.
2. List the relevant benefits and costs for each alternative.
3. Which alternative is more cost effective and by how much?

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Strip Plank Pague Total Sales revenue Less: Variable expenses Contribution margin Less: Direct fixed expenses $400,000 $200,000 300,000 $900,000 225000120,000 1250000) 595,000 175,000 80,000 50,000 $305,000 Mochine rent Supervision Depreciation (5,000) (20,000) 30,000 (55,000 15,000 (10,000) 35,000(1o (5,000) (30,000 (25,000) (10,000) 0 Segment margin 40,000