Shown below is a segmented income statement for Hickory Company€™s three wooden flooring product lines:

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.

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 howmuch?

Total Strip $400 225 $175 Plank $200 120 $ 80 Parquet $300 250 $ 50 Sales revenue 595 $305 Less: Variable expenses Contribution margin Less direct fixed expenses: (55) Machine rent Supervision (15) (10) Segment margin $120 $ 40 $150