AudioMart is a retailer of vintage vinyl records and equipment. The store carries two popular sound systemsSystem A and System B. System A, of slightly higher quality than System B, costs $18 more. With rare exceptions, the store also sells a specialized headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow:

Line Item Description	System A	System B	Headset
Sales	$44,900	$33,000	$7,500
Less: Variable expenses	20,500	25,600	3,200
Contribution margin	$24,400	$7,400	$4,300
Less: Fixed costs *	10,400	17,800	2,400
Operating income (loss)	$14,000	$(10,400)	$1,900

*This includes common fixed costs totaling $17,800, allocated to each product in proportion to its revenues.

The owner of the store is concerned about the profit performance of System B and is considering dropping it. If the product is dropped, sales of System A will increase by 32%, and sales of headsets will drop by 25%. Round all answers to the nearest whole number.

Required:

1. Prepare segmented income statements for the three products. Round your answers to the nearest dollar. Input expenses as positive numbers. 2(a) Conceptual Connection: Prepare segmented income statements for System A and the headsets assuming that System B is dropped. Round your answers to the nearest dollar. Input expenses as positive numbers. (Note: Be sure to complete 2(b) below the statement.) Conceptual Connection: Suppose that a third system, System C, with a similar quality to System B, could be acquired. Assume that with C the sales of A would remain unchanged; however, C would produce only 80% of the revenues of B, and sales of the headsets would drop by 10%. The contribution margin ratio of C is 50%, and its direct fixed costs would be identical to those of B. 3(a) Prepare segmented income statements for System A, System C and the headsets. Round your answers to the nearest dollar. Input expenses as positive numbers. (Note: Be sure to complete 3(b) below the statement.)