Armadale Company manufactures and sells three video games consoles: The Alpha X, the Beta Y, and the Gamma Z game systems. The January 2020 contribution margin statement for the entire company is shown below: Sales ? Less: Variable Costs $273,750 Contribution Margin $426,250 Less: Fixed Costs $400,000 Operating Income (Loss) $26,250 The accountant of the company has also compiled the following data for January 2020: Product Lines Alpha Beta Gamma Sales ? ? ? Variable costs as a % of Sales 40% 3596 45% $ 80,000 Traceable fixed costs $90,000 $125,000 PART A: ANSWER THE FOLLOWING QUESTIONS: a. What is the contribution margin (in dollars) of each product line? Alpha: Beta: Gamma: Bleta: Gamma: b. What is the segment margin (in dollars) of each product line? Alpha: Beta: Gamma: c. Calculate segment margin as a percentage of sales for each product line? Alpha: d. Which segment is the most profitable? Beta e. Which segment should be dropped, if any based on quantitative analysis alone? Beta f. What is the common fixed costs of the company as a whole? a. What is the contribution margin (in dollars) of each product line? Alpha: Beta: Gamma b. What is the segment margin (in dollars) of each product line? Alpha: . Beta: Gamma: C. Calculate segment margin as a percentage of sales for each product line? Alpha: Beta: Gamma: d. Which segment is the most profitable? Beta e. Which segment should be dropped, if any based on quantitative analysis alone? Beta f. What is the common fixed costs of the company as a whole? PART B: ANSWER THE FOLLOWING QUESTIONS: The sales manager of Armadale Company thinks that sales of Gamma would increase if they spent additional funds on advertising. Assuming his prediction is accurate, calculate the following: g. What is the increase in contribution margin? h. What is the increase (decrease) in income? h 1. Would you recommend that the sales manager proceed with the advertising campaign? Yes or No Yes Armadale Company manufactures and sells three video games consoles: The Alpha X, the Beta Y, and the Gamma Z game systems. The January 2020 contribution margin statement for the entire company is shown below: Sales ? Less: Variable Costs $273,750 Contribution Margin $426,250 Less: Fixed Costs $400,000 Operating Income (Loss) $26,250 The accountant of the company has also compiled the following data for January 2020: Product Lines Alpha Beta Gamma Sales ? ? ? Variable costs as a % of Sales 40% 3596 45% $ 80,000 Traceable fixed costs $90,000 $125,000 PART A: ANSWER THE FOLLOWING QUESTIONS: a. What is the contribution margin (in dollars) of each product line? Alpha: Beta: Gamma: Bleta: Gamma: b. What is the segment margin (in dollars) of each product line? Alpha: Beta: Gamma: c. Calculate segment margin as a percentage of sales for each product line? Alpha: d. Which segment is the most profitable? Beta e. Which segment should be dropped, if any based on quantitative analysis alone? Beta f. What is the common fixed costs of the company as a whole? a. What is the contribution margin (in dollars) of each product line? Alpha: Beta: Gamma b. What is the segment margin (in dollars) of each product line? Alpha: . Beta: Gamma: C. Calculate segment margin as a percentage of sales for each product line? Alpha: Beta: Gamma: d. Which segment is the most profitable? Beta e. Which segment should be dropped, if any based on quantitative analysis alone? Beta f. What is the common fixed costs of the company as a whole? PART B: ANSWER THE FOLLOWING QUESTIONS: The sales manager of Armadale Company thinks that sales of Gamma would increase if they spent additional funds on advertising. Assuming his prediction is accurate, calculate the following: g. What is the increase in contribution margin? h. What is the increase (decrease) in income? h 1. Would you recommend that the sales manager proceed with the advertising campaign? Yes or No Yes