Please see document

AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than System B, costs $20 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: Sales Less: Variable expenses Contribution margin Less: Fixed costs* Operating income System A System B Headset $52,000 $ 32,500 $8,000 22,000 25,500 3,200 $30,000 $ 7,000 $4,800 10,000 18,000 2,700 $20,000 $(11,000) $2,100 * This includes common fixed costs totaling $18,000, allocated to each product in proportion to its revenues. The owner of the store is concerned about the profit performance of System B and is considering dropping it. If the product is dropped, sales of System A will increase by 38%, and sales of headsets will drop by 25%. (Note: Round all answers to the nearest whole number.) Required: 1. Prepare segmented income statements for the three products. Round your answers to the nearest dollar. Use a minus sign to enter negative values. Segmented Income Statement System A System B Sales Headset Total $ $ $ $ Contribution margin $ $ $ $ $ $ $ Variable expenses Direct fixed cost Segment margin $ Common fixed cost Operating income 2. Conceptual Connection: Prepare segmented income statements for System A and the headsets assuming that System B is dropped. Round your answers to the nearest dollar. Use a minus sign to enter negative values. Segmented Income Statement System A Headset Sales Total $ $ $ $ $ $ $ Variable expenses Contribution margin $ Direct fixed costs Segment margin $ Common fixed costs Operating income 3. Conceptual Connection: Suppose that a third system, System C, with a similar quality to System B, could be acquired. Assume that with C the sales of A would remain unchanged; however, C would produce only 80% of the revenues of B, and sales of the headsets would drop by 10%. The contribution margin ratio of C is 50%, and its direct fixed costs would be identical to those of B. Segmented Income Statement System A System C Sales Headset Total $ $ $ $ Contribution margin $ $ $ $ $ $ $ Variable expenses Direct fixed cost Segment margin Common fixed cost Operating income $