Structuring a Keep-or-Drop Product Line Problem Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Machine rent Supervision Depreciation Strip $400,000 225,000 $175,000 5,000 15,000 35,000 $120,000 Plank $200,000 120,000 $ 80,000 20,000 10,000 10,000 $ 40,000 Parquet $300,000 250,000 $50,000 33,000 20,000 25,000 $ (28,000) Required: 1. List the alternatives being considered with respect to the parquet flooring line. Total 2. List the relevant benefits and costs for keeping the parquet flooring line. $900,000 595,000 $305,000 58,000 45,000 70,000 Segment margin Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000). All variable costs are relevant. Relevant fixed costs associated with this line include $33,000 in machine rent and $5,100 in supervision salaries. $132,000

Structuring a Keep-or-Orop Product Une Problem Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Hickory's manapement is deciding whether to keep or drop the parquet product line. Mickory's parquet flooring product line has a contribution margin of $50,000 (sales of $300,000 less total variable costs of $250,000 ). All variable costs are relevant. Relevant fixed costs associated wth this line inctude $33,000 in machine rent and $5,100 in supervision salarios. Required: 1. Ust the alternatives being considered with respect to the parquet flooring line: 2. List the relevant benefits and costs for keeping the parquet flooring line. in supervision salaries. Required: 1. List the alternatives being considered with respect to the parquet flooring line. 2. List the relevant benefits and costs for keeping the parquet flooring line. 3. Which alternative is more cost effective and by how much? by $