Segmented Income Statements, Adding and Dropping Product Lines Dantrell Palmer has just been appointed manager of Kirchner Glass Products Division. He has two years to make the division profitable. If the division is still showing a loss after two years, it will be eliminated, and Dantrell will be reassigned as an assistant divisional manager in another division. The divisional income statement for the most recent year is as follows: Sales $4,590,000 3,953,450 Less: Variable expenses Contribution margin $636,550 Less: Direct fixed expenses 675,000 Divisional margin $(38,450) Less: Common fixed expenses (allocated) 200,000 Divisional profit (loss) $(238,450) Upon arriving at the division, Dantrell requested the following data on the division's three products: Sales (units) Unit selling price Unit variable cost Product A Product B Product C 12,000 14,500 10,000 $150 $120 $70 $100 $83 $108 Direct fixed costs $100,000 $430,000 $260,000 He also gathered data on a proposed new product (Product D). If this product is added, it would displace one of the current products; the quantity that could be produced and sold would equal the quantity sold of the product it displaces, although demand limits the maximum quantity that could be sold to 20,000 units. Because of specialized production equipment, it is not possible for the new product to displace part of the production of a VE SUIU U ZUVUU UHLD. DELOUSE VI DELIGIEU MI VUULLIVII cyuIPITICIIL, IL IS TIUL PUbbiule lui uile lew PIUUULL LU UISpide par Ul uile pi UuULLIUIT UI second product. The information on Product Dis as follows: Unit selling price Unit variable cost Direct fixed costs $80 30 250,000 Required: 1. Prepare segmented income statements for Products A, B, and C. Kirchner Glass Products Division Segmented Income Statement Products A B C Total Sales Less: Variable expenses Contribution margin Less: Direct fixed expenses Product margin Less: Common fixed expenses Operating income (loss) Feedback Check My Work 2. Assume that Dantrell decides to produce products A and D for the coming year. Prepare the segmented income statements for these two products. Kirchner Glass Products Division Segmented Income Statement Products D Total Sales Less: Variable expenses Contribution margin Less: Direct fixed expenses Product margin Less: Common fixed expenses Operating income Feedback Check My Work Don't forget common fixed costs are added at the Division level. By how much will profits improve given the combination assumed above? Enter your answer in dollars