Pharoah Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows:

		A		B		C		Total
Sales		$2,295,000		$1,408,000		$1,813,500		$5,516,500
Variable expenses		1,608,000		601,300		1,099,100		3,308,400
Contribution margin		$687,000		$806,700		$714,400		$2,208,100
Advertising expense		$611,000		$430,000		$520,000		$1,561,000
Depreciation expense		16,500		10,300		20,400		47,200
Corporate expenses		90,800		80,500		105,700		277,000
Total fixed expenses		$718,300		$520,800		$646,100		$1,885,200
Operating income		$(31,300)		$285,900		$68,300		$322,900

Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees.

(a)

Restate the income statement in segment margin format.

		A		B		C		Total
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
select between addition and deduction AddLess: select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses		$enter a total amount for the second part		$enter a total amount for the second part		$enter a total amount for the second part		enter a total amount for the second part
select between addition and deduction AddLess: select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses								enter a dollar amount
select an income statement item AdvertisingCommon fixed expensesContribution marginDepreciationDirect fixed expensesOperating profitSales RevenueSegment marginVariable expenses								$enter a total amount for this statement

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