Exhibit 7-4 The following segmented annual income statement is for Paper Products, Inc. Product Lines Plain Lined Color Sales revenue $25,000 $100,000 $125,000 Total $250,000 Variable costs 15,000 50,000 85,000 150,000 Contribution margin $10,000 $50,000 $ 40,000 $100,000 Direct fixed costs 4,000 6,000 9,000 19,000 Allocated fixed costs 45,000 Profit (loss) L 16. Refer to Exhibit 7-4. If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue, what is the amount of allocated fixed costs for Plain? a. $15,000 b. $6,000 c. $22,500 d. $4,500 e. None of the answer choices is correct. 17. Refer to Exhibit 7-4. If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue, what is the total profit or (loss) for all product lines? a. $250,000 b. $164,000 c. $126,000 d. $36,000 e. None of the answer choices is correct. 18. In which of the following cases is a customer most likely to be dropped? a. When the customer's variable costs are more than its total fixed costs. b. When the customer's avoidable fixed costs are more than its contribution margin. c. When the customer's total fixed costs are more than its contribution margin. d. When the customer's contribution margin is more than its avoidable fixed costs. e. None of the answer choices is correct.