Keep or Drop, Services, Qualitative Aspects Jem Dawson owns Jem's Special Event Planning Service, a full service event plannet. Sem does much of the work herself and hires additional help as beeded. She plans corporate events, weddings, and special occasion parties. Each of these is considered a parite line of business due to the specialized aspects of each type of event. Last year, sem accountant provided the following segmented income statement: Corporate $55,000 (22.120) $33,180 Wedding $195,000 (97,500) 597,500 Special Occasion $168,000 (50,400) 5117,600 Total $418,300 (170,920) $240,20 Revenue Less variable costs Contribution margin Less common ined expenses Fixed operating expense Fixed selling Operating income (275,000) (55.000) 518,280 Som was not pleased with last year's results: corporate events were down considerably from the Vis few years to addition, the thinks that dealing with the corporate party throwers may be more work than it is worth. Two important aspects of event planning are negotiating with vendors (caterers, florists, bande and orchestras, and venues) on phot and setting up for and being present at the event set the corporate negotiating seemed to consume extra bent, and their restations on the price they would pay made the negotiations particularly difficult. She decided to gather some data on the negotiation and setting up activities Required: 1. Prepare a segmented income statement in the activity data for negotiating and setting up. The total cost of these two activities can be subtracted from the fixed operating expense. The remaining fixed operating expense will be the common fixed operating expense, Jem's Special Event Planning Service Segmented Income Statement Corporate Wedding Special Occasion To Contribution margin Less direct fixed expense TO DDDDDDD Product margin Less common foxed expenses 2. Jer believes that next year will be even worse. Her hunch is the corporate business will be down and that these dients will be especially intent on saving money by reducing the rate paid to Jem. She believes total corporate revenue may decrease by 25 percent overall, while the variable costs associated with those events will only decrease by 20 percent On the other hand, Jem expects weddings to increase. Her reputation is growing and she thinks she can raise her revenues in this area by 15 percent even if the number of wedding does not increase. As a result, she expects variable costs of weddings to remain static The specal occasions (wedding anniversary parties, bar and bat mitzvahs, and so on line is also expected to increase with revenue and variable costs expected to increase by 10 percentem does not know quite what to expect with respect to the negotiati and setting up activities, so she thinks she'll just keep those constant for planning purposes. Prepare a segmented income statement using the activity data and these assumptions Jem's Special Event Planning Service Segmented Income Statement Corporate Wedding Special Occasion Total Contribution maton Less direct and expenses in 53 DO0 III IDO Product margin Less common fixed expenses What does this income statement suggest about dropping the corporate segment