Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Top management can't understand why the Leather Division has such a low segment margin when its sales are only 20% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: Analysis shows that R65,000 of the Leather Division's selling and administrative expenses are common to the product lines. 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R212,000 or sales of the shoes product line by R157,000. The campaign would cost R42,000. a. Compute the increased operating income for these product lines for the expected increased sales. b. Based on the above results, which product line should be chosen? Garments Shoes