Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given...

 

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Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $420 $1,885 Less: Variable expenses 1,115 45 315 1,475 Contribution margin $165 $140 $105 $410 Less direct fixed expenses: Depreciation 50 15 12 77 Salaries 95 85 120 300 Segment margin $20 $40 $(27) $33 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: Estimate the impact on profit that would result from dropping Conway. Should Petoskey keep or drop Conway? Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $420 $1,885 Less: Variable expenses 1,115 45 315 1,475 Contribution margin $165 $140 $105 $410 Less direct fixed expenses: Depreciation 50 15 12 77 Salaries 95 85 120 300 Segment margin $20 $40 $(27) $33 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: Estimate the impact on profit that would result from dropping Conway. Should Petoskey keep or drop Conway?