Presented below is a segmented income statement for Norton Materials, Inc.’s three product lines:

The roofing tile line has a contribution margin of $10,000 (sales of $150,000 minus total variable costs of $140,000). All variable costs are relevant. Relevant fixed costs associated with this line include $10,000 in advertising and $35,000 in supervision salaries.
Required:
1. List the alternatives being considered with respect to the roofing tile line.
2. List the relevant benefits and costs for each alternative.
3. Which alternative is more cost effective and by how much?

Blocks Bricks Tile Total Sales revenue $500,000 $800,000 $150,000 Less: Variable expenses 250,000 480,000 140,000 $1,450,000 870,000 Contribution margin $250,000 $320,000 $ 10,000 $ 580,000 Less direct fixed expenses: Advertising 10,000 10,000 10,000 30,000 Supervision salaries 37,000 40,000 35,000 112,000 Depreciation 53,000 40,000 10,000 103,000 Segment margin $150,000 $230,000 $(45,000) $ 335,000