Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company 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 convention centers. A segmented income statement is shown below. Model 2 Model 3 Sales $624,500 Total $1,428,500 Model 1 Less variable costs of goods sold Less commissions Contribution margin Less common fixed expenses: Fixed factory overhead Fixed selling and administrative Operating income $250,000 (90,000) (4,800) $155,200 $554,000 (172,880) (31,000) $350,120 (354,800) (617,680) (22,250) $247,450 (58,050) $752,770 (410,000) (287,000) $55,770 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 fixed costs to see why they were so high. The following information on activities and drivers was gathered: Driver Usage by Model Activity Activity Cost Activity Driver Model 1 Model 2 Model 3 Engineering Setting up $80,000 183,000 Engineering hours Setup hours Customer service 117,000 Service calls 800 12,800 14,500 71 129 13,200 1,420 29,129 19,129 In addition, Model 1 requires the rental of specialized equipment costing $21,500 per year. Required: 1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative margins. 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". Reshier Company Segmented Income Statement Model 1 Model 2 Model 3 Total Sales 250,000 554,000 624,500 1,428,500 Less variable cost of goods sold -90,000 -172,880 -354,800 -617,680 Less commissions Contribution margin Less traceable fixed expenses: -4,800 -31,000 -22,250 -58,050 155,200 350,120 247,450 752,770 Engineering Setting up Equipment rental Customer service Product margin Less common fixed expenses: Factory overhead Selling and admin, expense Operating income