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$270$1,735Less: Variable expenses1,115451891,349Contribution margin$165$140$81$386Less direct fixed expenses:Depreciation50151479Salaries958584264Segment margin$20$40$(17)$43

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".

$fill in the blank 2

Should Petoskey keep or drop Conway?