Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Convay. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $315 $1,780 Less: Variable expenses 1,115 45 221 1,381 Contribution margin $165 $140 $94 $399 Less direct fixed expenses: Depreciation 50 15 14 79 Salaries 95 85 120 300 Segment margin $20 $40 $(40) $20 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Convway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Decrease v $ 75,000 x Should Petoskey keep or drop Conway? Keep V

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Keep-or-Drop Decision
Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:
Alanson
Boyne
Conway
Total
Sales revenue
$1,280
$185
$315
$1,780
Less: Variable expenses
1,115
45
221
1,381
Contribution margin
$165
$140
$94
$399
Less direct fixed expenses:
Depreciation
50
15
14
79
Salaries
95
85
120
300
Segment margin
$20
$40
$(40)
$20
Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.
Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped.
Required:
CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Convay. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".
Decrease v
75,000 x
Should Petoskey keep or drop Conway?
Кеep V
Transcribed Image Text:Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $315 $1,780 Less: Variable expenses 1,115 45 221 1,381 Contribution margin $165 $140 $94 $399 Less direct fixed expenses: Depreciation 50 15 14 79 Salaries 95 85 120 300 Segment margin $20 $40 $(40) $20 Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. Required: CONCEPTUAL CONNECTION: Estimate the impact on profit that would result from dropping Convay. Enter amount in full, rather than in thousands. For example, "15000" rather than "15". Decrease v 75,000 x Should Petoskey keep or drop Conway? Кеep V
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