Keep-Or-Drop Decision, Alternatives, Relevant Costs capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. additional information on fixed costs to see why they were so high. The following information on activities and drivers was gathered: In addition, Model 1 requires the rental of specialized equipment costing $23,000 per year. answer to the nearest dollar. If amount box does not require an entry, leave it blank or enter "0". Feedback Check My Work Less common fixed expenses: Operating income Feedback Check My Work the activities to each product. Common fixed expenses are not traceable to the segments. They would remain even if one of the segments were eliminated. 2. Using your answer to Requirement 1 , assume that Reshier Company is considering dropping any model with a negative product margin. What are the alternatives? will add q to operating income alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar. will add $ to operating income Feedback Check My Work 2. Do any of the products have a negative product margin? Review what you have learned in the chapter. What is the amount of the product margin? 3. Compute new activity rates for each activity to assign the costs of the activities to the product in question. What is the new product margin