Structuring a Keep-or-Drop Product-Line Problem with Complementary Effects Shown below is a segmented income statement for Mullett Marina's three main boating service lines: Winter Storage $4,000,000 2,000,000 $2,000,000 Boat Fuel& Concessions $1,000,000 200,000 $ 800,000 Boat Total Maintenance Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: $5,000,000 4,900,000 s 100,000 $10,000,000 7,100,000 $2,900,000 350,000 150,000 100,000 $ (500,000) Garage/warehouse rent 700,000 50,000 250,000 $1,000,000 1,105,000 270,000 425,000 $1,100,000 e/warehouse rent and 50% of Boat 55,000 Supervision 70,000 Equipment depreciation $600,000 Segment margin elevant fixed costs associated with this line include 60% of Boat Maintenance's garag Mainten ance's supervision salaries. In addition, assume that dropping the Boat Maintenance service line would reduce sales of the Winter Storage line by 20% and sales of the Boat Fuel & Concessions line by 10%. All other information remains the same If the Boa t Maintenance service line is dropped, what is the contribution margin for the Boat Fuel & 1. line? For the Winter Contribution Margin Winter storage line Boat fuel & concessions line 2. Which alternative (keep or drop the Boat Maintenance line) is now more cost effective and by how much? Complete the keep or drop analysis to decide between the alternatives. Differential Amount Keep Drop Contribution margin Less: Garage/warehouse rent Supervision drops Total relevant benefit (loss) the Boat Maintenance line. if it The company is better off by