Structuring a Keep-or-Drop Product Line Problem with Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip 9400,000 225,000 5175,000 plank $200,000 120,000 $ 90,000 Total $900,000 595,000 5305,000 Parquet Sales revenue Less: Variable expenises Contribution margin Less direct fixed expenses: $300,000 250,000 50,000 (5,000) (15,00o) (35,000) 5120,000 (55,000) (30,000) (70,000) $150,000 Machine rent (10,000) (10,000) 40,000 (30,000) 5,000) (25,000) $ (10,00D) Segment margin Hickcry's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin osso,000sales of $300,000 less total variable sts af 5250,000). All variable costs are relevant Ree ant r ed c sts as o ated with this lire ro lude 8 of parquet's nad ne ren and all or parquet's super ?s on salar es n addition, assume that drupp g the per quel p oduct lire wo d reduce sales of the strip line by 28% and sales or the plank line by 20%. All other information remains the same- Required 1. If the parquet praduct line is dropped, what is the contibution margin for the strip line? For the plank line? 2. Which altenative (keep or drop the parquet product line) is now more cost effetive and by how much? Keep by