DONT RESPOND IF YOU DO NOT KNOW HOW TO DO IT. RESPOND CORRECTLY TO RECEIVE THUMBS UP

\begin{tabular}{lrrrrr} & Model 1 & Model 2 & Model 3 & Total \\ \hline Sales & $225,000 & $582,000 & & $611,000 & $1,418,000 \\ Less variable costs of goods sold & (99,000) & (164,520) & (330,800) & (594,320) \\ Less commissions & (30,500)(4,000) & & (54,500)(20,000) \\ Contribution margin & $122,000 & $386,980 & & $260,200 & $769,180 \end{tabular} Less common fixed expenses: Fixed factory overhead (425,000) Fixed selling and administrative Operating income $33,180(311,000) In addition, Model 1 requires the rental of specialized equipment costing $21,000 per year. Segmented Income Statement Less traceable fixed expenses: Engineering Setting up Equipment rental Customer service Product margin Less common fixed expenses: Factory overhead Selling and admin, expense Operating income 2. Using your answer to Requirement 1 , assume that Reshier Company is considering dropping any model with a negative product margin. What are the alternatives? Which alternative is more cost effective and by how much? (Assume that any traceable fixed costs can be avoided.) Do NOT round interim calculations and, if required, round your answer to the nearest dollar. will add $ to operating income 3. What if Reshier Company can only avoid 176 hours of engineering time and 5,350 hours of setup time that are attributable to Model 1 ? How does that affect the alternatives presented in Requirement 2 ? Which alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar. will add \$ to operating income