Problem 8-29 Sheridan 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: Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses Total fixed expenses Operating income $2,216,000 1,617,000 $599,000 $513,000 15,800 92,200 $621,000 $(22,000) $1,408,000 600,100 $807,900 $426,000 10,000 83,100 $519,100 $288,800 Total $1,816,400 $5,440,400 1,082,2003,299,300 $734,200 $2,141,100 $520,000 $1,459,000 21,200 47,000 106,000 281,300 $647,200 $1,787,300 $87,000 $353,800 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. Your answer is correct. Restate the income statement in segment margin format. Sales Revenue T Variable expenses Contribution margin 0 T 21411001 Direct fixed expenses Advertising Depreciation 70200 Segment margin 635100 Depreciation 15800 10000 21200 T 47000 Segment margin : 70200 635100 Less Common fixed expenses 281300 Operating profit B 353800 LINK TO TEXT LINK TO VIDEO Your answer is correct. What would be the effect on income if product A were dropped? Net income would decrease 86000 LINK TO TEXT LINK TO VIDEO x Your answer is incorrect. Try again. Management is considering making a new product using product A's equipment. If the new product's selling price per unit were $11. Its variable costs were $4, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile? (Round answers to decimal places, e.g. 125.) 75543 Units Click if you would like to Show Work for this question: Open Show Work