A value-driven car manufacturer, Sheridan, started its business more than 50 years ago, making and selling a sedan body style. Sedans were popular at the time, and this one drove the success of Sheridan for years due to its practical yet stylish nature. As times changed, Sheridan designed models in different body styles, and those models have outpaced sedans, as follows. Sedan SUV Truck Van Sales $1,192,000 $4,176,000 $3,916,000 $2,007,000 Variable costs 696,000 1,984,000 1,816,000 1,109,000 Contribution margin 496,000 2,192,000 2,100,000 898,000 Fixed costs 793,600 891,000 1,194,000 800,000 Operating income (loss) $(297,600) $1,301,000 $906,000 $98,000 The income statements above reflect the second consecutive year the sedan category has lost money. Sheridan is concerned about dropping this vehicle, however, since the company's success was originally built on it. (a) Sheridan believes it can save $595,200 in fixed costs associated with the sedans if it drops that vehicle category. Should the company seriously consider dropping it? How much better or worse off, financially, would it be by dropping the sedan? Sheridan would be better off worse off eTextbook and Media Save for Later by $ Attempts: 0 of 3 used Submit Answer