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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 $375 $1,840 Less: Variable expenses 1,115 45 281 1,441 Contribution margin $165 $140 $94 $399 Less direct fixed expenses: Depreciation 50 15 13 78 Salaries 95 85 104 284 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". Decrease $fill in the blank 2 5,000 Should Petoskey keep or drop Conway? Keep

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 $375 $1,840 Less: Variable expenses 1,115 45 281 1,441 Contribution margin $165 $140 $ $94 $399 Less direct fixed expenses: Depreciation 50 15 13 78 Salaries 95 85 104 284 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". Decrease 5,000 x Should Petoskey keep or drop Conway? Keep Feedback Check My Work Look at contribution margin and adjust for dropping product line. Consider the sunk cost and that it is not relevant

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