Exercise 23-8 Income analysis of eliminating departments LO P4 Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is available regarding its canoe segment. MARINETTE COMPANY Income StatementCanoe Segment Sales $ 3,000,000 Variable costs Direct materials $ 650,000 Direct labor 700,000 Variable overhead 500,000 Variable selling and administrative 300,000 Total variable costs 2,150,000 Contribution margin 850,000 Fixed costs Direct 575,000 Indirect 500,000 Total fixed costs 1,075,000 Net income $ (225,000 ) 1. If canoes are discontinued, calculate the net income lost or gained. 2. Should management discontinue the manufacturing of canoes?

If canoes are discontinued, calculate the net income lost or gained. (Leave no cells blank. Enter zeros where appropriate.) Keep the department Eliminate the department Sales Expenses Total expenses Net income (loss)