Crane Toys' management is considering eliminating product A. which has been showing a loss for several years. The company's annual income statement, is as follows: A B Total Sales $2.274,000 $1,400,000 $1,820.000 $5,494,000 Variable expenses 1.659,000 600,800 1,086,000 3,345,800 Contribution margin $615,000 $799,200 $734,000 $2.148.200 Advertising expense $520,000 $429.000 $522,000 $1,471,000 Depreciation expense 15,300 11,000 21,300 47,600 Corporate expenses 92,400 80.200 106,300 278,900 Total fixed expenses $627.700 $520,200 $649.600 $1.797,500 Operating income $(12,700) $279,000 $84,400 $350,700 Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses. Allocated based on number of employees. tin segment margin format. (a) Advertising Common fixed expenses Contributian margin Depreciation Direct fixed expenses Operating profit Sales Revenue Segment margin Variable expenses B $ Contribution margin Less Direct fixed expenses Advertising Depreciation Restate the income statement in segment margin format. A B Total $ $ $ $ $ What would be the effect on income if product A were dropped? Net income would decrease by $ e Textbook and Media Save for Later Attempts: 1 of 3 used Submit Answer (c) Management is considering making a new product using product A's equipment. If the new product's selling price per unit were $11, its variable costs were $5, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile? Units

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