Rose Apothecary is "a general store, but it's also a very specific store. It's also not just a store, it's a place where people can come and get coffee or drinks, but it's not a coffee shop, nor is it a bar. It's an environment." Rose Apothecary sell three different types of products: body care, local cheeses, and wines. The company is considering dropping its body care line, as it is showing a loss, and adding a Home Goods line. The following income statement was available for the month: Body Care Cheese Wine Sales Revenue $9,750 $15,000 $27,000 (COGS) (8,000) (7,500) (9,000) Gross Profit 1,750 7,500 18,000 (Opex) (2,500) (2,000) (1,000) OPY (750) 5,500 17,000 For all three current segments, 25% of COGS is variable product costs. The remainder is direct fixed product costs. 25% of opex is variable period cots and the remainder is common fixed costs. If Rose Apothecary adds the Home Goods line, sales are expected to be $34,000, with variable costs equaling 10% of sales, and traceable fixed costs of $15,000. Adding the Home Goods line is expected to increase sales in the Cheese and Wine departments by 20%. Which of the following statements is correct? If the Body Care segment is dropped and nothing is added in its place, Operating Income will increase by $750. If the Home Goods line is added, common fixed costs will increase by $15,000. If the Body care segment is dropped and the Home Goods line is added in its place, Operating Income will increase by $21,900. The operating income under the traditional income statement is greater than the operating income under the Segmented income statement. The Body Care segment is a losing segment and should be dropped even if nothing else will be sold in its place