Exercise 13-18 Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented inco statement, with amounts given in thousands, follows: Total Conway Alanson Boyne $1,765 1,385 380 Sales revenue $185 $300 $1,280 1,115 Less: Variable expenses Contribution margin Less direct fixed expenses: Depreciation 45 225 140 75 165 75 260 15 50 95 85 Salaries S (15) $ S 20 40 45 Segment margin Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciati on the equipment is dedicated to the product lines. None of the equipment can be sold. Also, ea of the three products has a different supervisor whose position would remain if the associat product were dropped. Required: CONCEPTUAL CONNECTION Estimate the impact on profit that would result from droppi Conway. Explain why Petoskey should keep or drop Conway. 80 Complete Exercise 13-18 and answer the following questions. Remember to enter numeric amounts without a $ or, (a comma). If the answer is $20,000.00, then enter the number as 20000. Remember to round to 2 decimal places. For numbers such as 1.456, round up to 1.46 and for numbers such as 1.452, round down to 1.45 Required: The company is considering dropping the Conway product. If Petoskey drops Conway, the contribution margin will (increase, decrease) by $ AV as a result of the change. A Note that the direct fixed expense for depreciation of the Conway product is (relevant, not relevant) to the AV decision. In addition, the supervisory salary cost is (avoidable, unavoidable). A Therefore, the overall impact of dropping Conway is that net profits will (increase, decrease) by $ AV Petoskey should AV (keep, drop) Conway because profits A (higher, lower) are A (with, without) Conway