Assume that sales of KevlarR at DuPont have dropped significantly. DuPont reported the following results for this product line for the past month and expects this sales pattern to continue into the future.

Operating Statements Kevlar

Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,500,000

Variable manufacturing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,500,000)

Fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,000,000)

Sales and administrative costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,000,000)

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,000,000)

1. Assume that approximately 30% of the fixed manufacturing overhead and none of the sales and administrative costs can be avoided if Kevlar is dropped. In order to determine the “true performance” of the Kevlar product line, what is its incremental segment profit or loss?

2. If DuPont were to drop the Kevlar product line and use the available resources to produce another product that provided an incremental profit of $1,500,000, what is the overall economic profit or loss of the Kevlar product line?