Structuring a Keep-or-Orop Product Line Problem with Complementary Effects ghown below is a segmented income statement for Hickory Company's three wooden flooring product lines: Hickory's management is deciding whether to keep or drop the parquet product line. Hackary's parquet flooning product line has a contritution margin of $50,000 (saies of $300,0 less totai variable costs of $250,000 ). All variathe costs are relevant: line would reduce sales of the strip line by 21% and sales of thi plank line by 20%. All other information remains the same. Required: 1. If then parquet product ine is dropped, whot is the contribution margin for the strip ino? Hickory's managernent is deciding whether to keep or drop the parquet product line. Hickory's parquet flooring product line has a contrnbition margin of iso, 000 ( s les of $100,000 less total variable costs of $250,000 ), All variable costs are relevant. Relevant foxed costs associated with this line include 80% of parquet's machine rent and all of parquet's supervision salaries. In adtition, assume that dropping the parouet product line would reduce sales of the strip line ty 21% and sales of the plank line by 20%. All other information remains the sarne. Required: 1. If the parquet product line is dropped, what is the contribution ruargin for the strip line? 1 x for the plank tinel? 1 2. Which alternative (keep or drop the parquet product line) is now nore cost eflective and by how much? by 1 x reiteack roud whe 1. Look at concubution margin and adjust for dropping product line. 2. Set up four columns, first column lists the income statement information startang with contubuton margin, Second and third columns are for alternatives, keep or drep. and list all amounts. Fourth column is the differential amount to keep