10.

Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment.

MARINETTE COMPANY Income StatementCanoe Segment
Sales				$	3,800,000
Variable costs
Direct materials	$	810,000
Direct labor		860,000
Variable overhead		660,000
Variable selling and administrative		380,000
Total variable costs					2,710,000
Contribution margin					1,090,000
Fixed costs
Direct		735,000
Indirect		660,000
Total fixed costs					1,395,000
Net income				$	(305,000	)

1. If canoes are discontinued, calculate the net income lost or gained.

Keep the Eliminate the department department Sales Expenses Total expenses Net income (loss)