4) Halsey Mechanical repairs automobiles, small engines and boats. Their product line income statement is as follows: Car/Truck Repair Small Engines Boats/ Marine Total Sales Revenue Less: Variable Expenses $3,500,000 $1,000,000 $4,500,000 $9,000,000 ($2,000,000) ($250,000) ($4,200,000) ($6,450,000) $1,500,000 $750,000 $300,000 $2,550,000 Contribution Margin Less: Direct Fixed Expenses Garage/Warehouse Rent Supervision Equipment Depreciation Segment Margin ($600,000) ($50,000) ($200,000) $650,000 ($55,000) ($70,000) ($75,000) $550,000 ($500,000) ($1,150,000) ($100,000) ($220,000) ($200,000) ($475,000) ($500,000) $700,000 The boat/marine line is losing money. Management is considering dropping it. The company can avoid the following fixed costs associated with the boat/marine line if the line is dropped: Garage/Warehouse Rent 75.0% Supervision 75.0% Depreciation 33.0% The company also is aware they may lose certain customers who value Halsey's "one-stop" facility for engine repair. They estimate they will lose 10% of their car/truck repair business and 15% of the small engine business if they drop the boat/marine segment. Lay out a segment P&L assuming Halsey drops the boat/marine line. Which decision (keep or drop) generates the largest total margin? (15 points)