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   $405   $1,870   Less: Variable expenses 1,115   45   324   1,484   Contribution margin $165   $140   $81   $386   Less direct fixed expenses:                   Depreciation 50   15   12   77     Salaries 95   85   92   272   Segment margin $20   $40   $(23)   $37   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 Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".   $fill in the blank 2 Should Petoskey keep or drop Conwa

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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   $405   $1,870  
Less: Variable expenses 1,115   45   324   1,484  
Contribution margin $165   $140   $81   $386  
Less direct fixed expenses:                
  Depreciation 50   15   12   77  
  Salaries 95   85   92   272  
Segment margin $20   $40   $(23)   $37  

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 Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".
  $fill in the blank 2

Should Petoskey keep or drop Conway?
 

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