Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows:

Line Item Description	Torch	Elk	Walloon	Total
Sales revenue	$350,000,000	$50,000,000	$80,000,000	$480,000,000
Less: Variable expenses	300,000,000	10,000,000	60,000,000	370,000,000
Contribution margin	$ 50,000,000	$ 40,000,000	$ 20,000,000	$ 110,000,000
Less direct fixed expenses:
Depreciation	12,000,000	7,000,000	5,000,000	24,000,000
Advertising	21,000,000	10,000,000	30,000,000	61,000,000
Segment margin	$ 17,000,000	$ 23,000,000	$ (15,000,000)	$ 25,000,000

Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.

Assume that each of the three products has a different marketing campaign whose advertising would remain if the associated product were dropped.

Required:

1. Conceptual Connection: Estimate the impact on profit that would result from dropping Walloon. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".

IncreaseDecreaseDecrease

fill in the blank 1 of 1$

2. Conceptual Connection: Should Charlevoix keep or drop Walloon?

KeepDropKeep

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