Refer to the information for Mullett Marina above. Mullett's management is deciding whether to keep or drop the Boat Maintenance service line. Mullett's Boat Maintenance service line has a contribution margin of $100,000 (sales of $5,000,000 less total variable costs of $4,900,000). All variable costs are relevant. Relevant fixed costs associated with this line include 60% of Boat Maintenance's garage/warehouse rent and 50% of Boat Maintenance's supervision salaries.

Shown below is a segmented income statement for Mullett Marina's three main boating service lines:

Required:
1. List the alternatives being considered with respect to the Boat Maintenance service line.
2. List the relevant benefits and costs for each alternative.
3. Which alternative is more cost effective and by how much?

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Winter Boat Fuel& Concess Boat St orage ions Maintenance Total Sales revenue Less: Variable expenses Contribution margin Less direct fixed expensess $4,000,000 $1,000,000 $5,000,000 $10,000,000 7,100,000 $2,000,000 800,000 100,000 2,900,000 2,000,000 200,000 4,900,000 Garage/warchouse rent Supervision (700,000) (50,000) (350,000 (1.105.000) (70,000)(150,000) (270,000) Equipment depreciation 250,00 (75,000) 100,000425,000) $1,000,000 600,000 (500,000) $ 1,100,000 Segment margin