ACME Incorporated sells two products: widgets and gadgets. 

The following product information is available: 

                                                                 widgets           gadgets. 

 Sales                                                       $60,000           $60,000 

Variable expenses (% of sales)             70%                  60%

Total fixed expenses are $48,000, of which $20,000 would disappear if widgets are discontinued and $18,000 would disappear if gadgets are discontinued. 

Required: 

1. Prepare a segmented income statement in good form. 

2. Which product would result in a greater increase to operating income with an equal increase in sales? Why?