Problem 2 Nederlander Company makes 3 products: Fiets, Klompen & Kaas. Nederlander is considering dropping the Fiets product line based on the following financial data from last year: J 0 1 2 3 4 5 6 7 8 9 0 1 Sales Variable costs Contribution margin Fixed costs: Advertising expense Depreciation of special equipment* Salaries of segment manager Indirect fixed costs Fiets 5,000 2,000 3,000 Contribution margin Advertising expense Depreciation of special equipment* Salaries of segment manager Indirect fixed costs Net operating income (loss) Klompen 10,000 3,500 6,500 Incremental profit (loss) Should Nederlander drop the Fiets? 800 600 300 1,500 2,500 3,500 Total fixed costs 3,200 5,700 6,850 Net operating income (loss) -200.00 800 1,150 The special equipment used exclusively by each segment can be sold for approximately book value 1,500 1,300 400 Complete the following table to show the effect on Nederlander's profit if it keeps or eliminates the Fiets product line. Kaas 15,000 7,000 8,000 Keep Fiets Drop Fiets 3,000 800 600 300 1,500 -200.00 1,250 1,600 500 No X X X Ix X X X

Problem 2 Nederlander Company makes 3 products: Fiets, Klompen \& Kaas. Nederlander is considering dropping the Flets product line based on the following financial data from last year: - The special equipment used exclusively by each segment can be sold for approximately Complete the following table to show the effect on Nederlander's profit if it keeps or eliminates the Fiets product line. Should Nederlander drop the Fiets