Jameson Sports manufactures soccer balls and cleats. The projected income statements for the two products are as follows: Soccer Balls Sales $450,000 Cleats $750,000 Less: Variable costs (270,000) (300,000) Contribution Margin $180,000 $450,000 Less: Direct fixed expenses (200,000) (220,000) Segment margin $(20,000) $230,000 Less: Common Fixed Costs (50,000) (75,000) Net Income (Loss) $(70,000) $155,000 The common fixed costs have been allocated on the basis of direct labour hours. The president of Jameson is considering dropping the soccer ball line. However, if the line is dropped, sales of cleats are projected to drop by 5%. REQUIRED: (a) (b) Should the company drop or keep the soccer ball line? Show supporting calculations. Assume that increasing the advertising budget by $10,000 will increase sales of soccer balls by 5% and cleats by 3%. Should advertising be increased? Show supporting calculations.