roblem 8-29 (Part Level Submission) Delta Aluminums management is considering eliminating product B, which has been showing a loss for several years. The companys annual income statement is as follows:

		A		B		C		Total
Sales		$2,210,000		$1,402,000		$1,813,500		$5,425,500
Variable expenses		1,456,000		801,900		1,096,200		3,354,100
Contribution margin		$754,000		$600,100		$717,300		$2,071,400
Advertising expense		$618,000		$527,000		$521,000		$1,666,000
Depreciation expense		15,700		10,000		21,700		47,400
Corporate expenses		82,600		81,600		106,700		270,900
Total fixed expenses		$716,300		$618,600		$649,400		$1,984,300
Operating income		$37,700		$-18,500		$67,900		$87,100

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)

	Your answer is correct.

Restate the income statement in segment margin format.

		A		B		C		Total
		$		$		$		$
		$		$		$
								$

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(b)

	Your answer is incorrect.

What would be the effect on income if product B were dropped?

Net income would by $ .

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(c) Management is considering making a new product using product Bs equipment. If the new products selling price per unit were $11, its variable costs were $4, and its advertising costs were the same as for product B, how many units of the new product would the company have to sell to make the switch from product B to the new product worthwhile? (Round answers to 0 decimal places, e.g. 125.)

Units