Keep-or-Drop Decision

Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:

AlansonBoyneConwayTotalSales revenue$1,280$185$330$1,795Less: Variable expenses1,115452481,408Contribution margin$165$140$82$387Less direct fixed expenses:Depreciation50151277Salaries958588268Segment margin$20$40$(18)$42

Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.

Assume that each of the three products has a different supervisor whose position wouldremainif the associated product were dropped.

Required:

Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".

$