Keep-or-Drop Decision Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Alanson Boyne Conway Total Sales revenue $1,280 $185 $315 $1,780 1,115 45 205 1,365 $165 $140 $110 $415 Less: Variable expenses Contribution margin Less direct fixed expenses Depreciation 50 15 14 79 Salaries 95 85 116 296 Segment margin $20 $40 $(20) $40 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 would remain if 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, 5000 rather than 15 12 X Next Salaries 95 85 116 296 Segment margin $20 $40 $(20) $40 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 would remain if 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" Decrease 12 X Should Petoskey keep or drop Conway? Keep V Feed Chacy W Look at contribution margin and adjust for dropping product line. Consider the sunk cost and that it is not relevant