E5.16 (LO 5), AP The marketing firm of Molly, Betty & Assoc. (MBA) has helped hundreds of companies gain worldwide brand recognition. They specialize in products directed toward key generational segments: Gen Y, Gen Z, and Baby Boomers. Select financial information from MBA last year is presented below, including some detail for the fixed costs associated with servicing each of these market segments: Contribution margin Fixed costs: Gen Y Gen Z Boomers $450,000 $625,000 $195,000 Salaries for dedicated staff Depreciation of office assets Operating costs Executive salaries 80,000 90,000 120,000 30,000 30,000 30,000 15,000 15,000 15,000 150,000 150,000 150,000 Depreciation, operating costs, and executive salaries have been split equally among the segments. Required a. Which segment(s) generated positive operating income last year? Losses? b. Categorize the above fixed costs as either direct or allocated fixed costs, and then calculate segment margin for each division. Based on this quantitative information, should executives consider dropping any of the segments? Explain. c. How much better or worse off would MBA be if it dropped its Baby Boomer segment? If it would be quantitatively better off by dropping that segment, what qualitative considerations might push the decision-makers to keep that segment anyway? On the other hand, if it would be quantitatively better off by keeping that segment, are there any qualitative considerations that might push the decision makers to drop the segment anyway? Explain.