Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Compamy makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more:advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and comvention centers. While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10 percent of sales and is low for this type of company. The company's controller gathered additional information on foxed costs to see why they were so high. The following information on actlvities and divers was gathered: In addition, Model 1 requires the rental of specialized equipment costino $23,000 per year. Required: 1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative marging. Do NOT round interim calculations and, if required, round your answer to the nearest dollar. If amount box does not require an entry, leave it. blank or enter "0". 2. Using your answer to Requirement 1 , assume that Reshier Company is considering dropping amy moded with a negative product margin. What are the alternatives? Which altemative is more cost effective and by how much). (Assume that any traceabie fixed costs can be aveidedi) Do Not rosanul interim! calculations and, if reguired, round your answer to the nearest dollar. will atsd 1 to operatirio income 3. What if Reshier Compariy can only avold 136 hours of engineering time and 5.450 hicurs of setup time that ate attibutable to Model 1? How does that atfect the altematives presented in Jequirement 27 Which alternative is mere cost effective and by how much? Do Nor round interim calculations and. if reguired. found vour answer to the nearest dollar. 2. Using your answer to Requirement 1, assume that Reshier Company is considering dropping any model with a negative product margin. What are the attematives? Which altemative is more cost effective and by how much? (Assume that any traceable fixed costs can be avolded.) Do NoT round interim calculations and, if required, round your answer to the nearest dollar. will add 4 to operating income 3. What if Reshier Company can only avoid 186 hours of engineering time and 5,450 hours of setup time that are attributable to Model 1 ? How does that affect the alternatives presented in Requirement 2? Which alternative is more cost effective and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar. will add 1 to operating income