1-864,pdf (SECUR... i-864instr.pdf 7 19 (+) 56.8% Question 4: Knicks Inc. makes basketball equipment, including basketball hoops. They are currently debating if they should drop this segment of the business. Please use the following information to determine whether Knicks Inc. should drop this segment. Knicks Inc. Basketball Hoop Segment Income Statement $450,000 Sales Less: Variable Expenses Variable Manufacturing Costs Variable Shipping Costs Variable Selling Costs Contribution Margin Less: Fixed Expenses 125,000 73,000 4,000 252,000 218 94,000 57,000 13,000 17,000 24,000 18,000 Depreciation of Equipment Adverti Rent Factory Space Rent-Warehouse Space Variable Selling Costs General Admin. Expenses Net Operating Loss 288 Other Information: . The Fixed General Factory overhead and Fixed general administrative expenses will not be affected by dropping the basketball hoop segment. The equipment used to manufacture the hoops has no resale value or alternative use, though they are able to reduce factory rent by 80% After dropping the segment, Knicks inc. will still have to pay $10,000 for warehouse space