Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Strip Plank Parquet Total Sales revenue $400,000 $200,000 $300,000 $900,000 Less: Variable expenses 225,000 120,000 250,000 595,000 Contribution margin $175,000 $ 80,000 $ 50,000 $305,000 Less direct fixed expenses: Machine rent (5,000) (20,000) (50,000) (75,000) Supervision (15,000) (10,000) (20,000) (45,000) Depreciation (35,000) (10,000) (25,000) (70,000) Segment margin $120,000 $ 40,000 $ (45,000) $115,000 Hickory's management is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contribution margin

Required:

1. If the parquet product line is dropped, what is the contribution margin for the strip line? For the plank line?

	Contribution Margin
Strip line	$fill in the blank 1
Plank line	$fill in the blank 2

2. Which alternative (keep or drop the parquet product line) is now more cost effective?

Drop the parquet product lineKeep the parquet product lineKeep the parquet product line

By how much? $fill in the blank 4