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Problem 2 Nederlander Company makes 3 products: Fiets, Klompen & Kaas. Nederlander is considering dropping the Fiets product line based on the following financial data from last year: 5. 5 Fiets 3,000 1,200 1,800 Klompen 6,000 2,100 3,900 Kaas 9,000 4,200 4,800 27 3 480 Sales Variable costs Contribution margin Fixed costs: Advertising expense Depreciation of special equipment Salaries of segment manager Indirect fixed costs Total fixed costs Net operating income (loss) 750 960 360 180 1 2 900 780 240 1,500 3,420 480 3 900 1,920 -120.00 300 2,100 4,110 690 5 * The special equipment used exclusively by each segment can be sold for approximately book value Complete the following table to show the effect on Nederlander's profit if it keeps or eliminates the Fiets product line. Keep Fiets Drop Fiets The special equipment used exclusively by each segment can be sold for approximately book value Complete the following table to show the effect on Nederlander's profit if it keeps or eliminates the Fiets product line. Contribution margin Advertising expense Depreciation of special equipment Salaries of segment manager Indirect fixed costs Net operating income (loss) Keep Fiets Drop Fiets 1,800 Ix 480 X 360 X 180 X 900 X -120.00 X Incremental profit (loss) X Should Nederlander drop the Fiets? No +

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