(b) should segment b be dropped?

9. Company DEF is comprised of three segments; however, based on the most recent annual income statement, management is considering dropping Segment B due to its poor performance: Segment A Segment B Segment C Revenues $374,000 $316,000 $555,000 Direct materials $85,000 $52,000 $94,000 Direct labor $108,000 $96,000 $140,000 Manufacturing overhead (MOH) $130,000 $155,000 $181,000 Selling and administrative (S&A) expenses $35,000 $50,000 $82,000 Net operating income/(loss) $16,000 ($37,000) $58,000 Manufacturing overhead (MOH) and selling and administrative (S&A) expenses are both mixed costs. In Segment B, 25% of MOH is variable and 40% of S&A is variable. If the company eliminates Segment B, then it will save 30% of the segment's fixed costs. (a) Prepare a financial analysis that clearly shows the impact to Company DEF's annual net operating income if it drops Segment B