Answer qn 1-4

Information: Dexter Company makes three types of GPS devices. The Basic GPS model is an entry. level automotive GPS device; it is sold through discounters and Amazon.com. The Runner's GPS is a miniaturized model that allows the runner to track mileage, steps, and heart rate while running; it is sold through athletic stores and on sports gear websites. The Chart Plotter is a specialized GPS device for sailors; it can be customized with maps of the sea floor and specific geographic areas of coast line and deep water. It is sold via the Web on dedicated GPS sites. Dexter Company is considering dropping the Basic GPS line and keeping the Runner's GPS and Chart Plotter. The segmented income statement is presented below. Runner's Chart Basic GPS GPS Plotter Total Sales $ 450,000 $ 980,000 . $1,670,000 $ 3,100,000 Less variable costs (324,000) (372,000) (601,600) (1,297.600 Contribution margin $ 126,000 $ 608,000 $1,068,400 $ 1,802,400 Less direct fixed costs: Advertisings (85,000) (124,000) (130,000) (339,000) Supervision (60,000) (115,000) (135,000) (310,000 Product margin $ (19,000 $ 369,000 -803,400 $ 1,153,400 Less common fixed expenses 915,000 Operating income $ 238,400 Why: Companies need to consider whether a segment or product line should remain. This problem requires a look at the relevant costs and benefits of dropping the segment. Required: 1. List the alternatives being considered. 2. List the relevant benefits and costs for each alternative. 3. Which alternative is more cost effective and by how much? 4. What if dropping the Basic GPS line would mean a 10 percent loss of volume for the Runner's GPS device and a 2 percent loss in volume for the Chart Plotter? Which alternative would be more cost effective and by how much