Mike's Crafts & Celebrations, Inc. is a manufacturer of party supplies whose tag line is"Nothing you need, Everything you want."The company operates in three segments, Art Supplies, Holidays and Mike's Brand Packaging.Production from Mike's Brand Packaging, such as cellophane and ribbon, is used extensively in completing the inventory for sale by both Art Supplies and the Holidays segments.Mike's Brand Packaging has external sales in addition to the internal sales.All information contained includes the impact of intercompany sales, however all intercompany sales are recorded at the same expected profit margin as if they were external.

Variable costs include materials, labor and other, all other costs other than sales commissions are fixed.Sales commissions are[600,000]of sales for any product, including intercompany sales.

The manufacturer's income statement for the most recent month is given below:

Segments Art Supplies Holidays Mike's Brand Total Company Packaging Sales [$500,000] $750,000 $500,000 [$1,750,000] Expenses: Materials, labor, and other $150,000 $300,000 150,000 $600,000 Sales commissions [$180,000] [$240,000] [$180,000] [$600,000] Advertising 75,000 50,000 35,000 160,000 Salaries 100,000 150,000 200,000 450,000 Equipment depreciation [$20,000] [$25,000] [$5,000] [50,000] Warehouse rent [$20,000] [$24,000] [$6,000] [$50,000] Corporate Overhead 75,000 75,000 75,000 225,000 Total expenses [$620,000] [$864,000] [$651,000] [$2,135,000] Net operating income (loss) [$120,000] [$114,000] [$151,000] [$385,000]