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13. EX.08.43 Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented...

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Accounting

13. EX.08.43 Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Sales revenue Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation Salaries Segment margin Alanson Boyne Conway Total $1,280 $185 $300 $1,765 1,115 45 225 1,385 $ 165 $140 $75 $380 50 95 Required: $20 15 85 $ 40 $ (15) 10 80 75 260 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. Should Petoskey keep or drop Conway? $45 Assume that each of the three products has a different supervisor whose position would remain if the associated product were dropped. 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".

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