Question

Refer to the information for Petoskey Company from Exercise 23- 30. Assume that 20 percent of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would go elsewhere to purchase Alanson.
Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:
Required:
Estimate the impact on profit that would result from dropping Conway. Explain why Petoskey should keep or drop Conway.


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  • CreatedSeptember 22, 2015
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