Refer to the information for Mullett Marina above. Relevant fixed costs associated with this line include 60% of Boat Maintenance's garage/warehouse rent and 50% of Boat Maintenance's supervision salaries. In addition, assume that dropping the Boat Maintenance service line would reduce sales of the Winter Storage line by 20% and sales of the Boat Fuel & Concessions line by 10%. All other information remains the same.

Shown below is a segmented income statement for Mullett Marina's three main boating service lines:

Required:
1. If the Boat Maintenance service line is dropped, what is the contribution margin for the Boat Fuel & Concessions line? For the Winter Storage line?
2. Which alternative (keep or drop the Boat Maintenance line) is now more cost effective and by how much?

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Winter Boat Fuel& Concess Boat St orage ions Maintenance Total Sales revenue Less: Variable expenses Contribution margin Less direct fixed expensess $4,000,000 $1,000,000 $5,000,000 $10,000,000 7,100,000 $2,000,000 800,000 100,000 2,900,000 2,000,000 200,000 4,900,000 Garage/warchouse rent Supervision (700,000) (50,000) (350,000 (1.105.000) (70,000)(150,000) (270,000) Equipment depreciation 250,00 (75,000) 100,000425,000) $1,000,000 600,000 (500,000) $ 1,100,000 Segment margin