Tampermure Company has three product segments: Prefabrications, Castings, and Forging. Forging seems to be unprofitable and management is considering dropping the segment entirely. Fixed Costs have been separated into Direct and Common. Direct Fixed Costs are correlated to the product line. Common Fixed Costs are facility level activities allocated as a percentage of total revenue. 5 Required: Compute the allocation of Common Fixed Costs and Net Operating Income for each segment and the total. 9 O Sales 1 Variable Cost Prefabrications Casting Forging Total $ 120,000 $ 118,000 $ 62,000 $ 300,000 71,000 78,000 46,000 195,000 2 Contribution Margin 49,000 40,000 16,000 105,000 3 Direct Fixed Costs 12,000 9,000 7,000 28,000 4 Segment Margin 37,000 31,000 9,000 77,000 5 Common Fixed Costs 60,000 6 Net Operating Income $17,000 7 Tampermure Company's management recommends that Forging be dropped immediately to increase profits. Show 8 what happens to Tampermure Company's income statement if this happens. 9 0 Hint: Use the original data to fill and compute amounts. 1 2 3. Sales Prefabrications $120,000 Casting Forging Total $118,000 $ $238,000 4 Variable Cost 71,000 78,000 149,000 5 Contribution Margin 49,000 40,000 89,000 6 Direct Fixed Costs 12,000 9,000 21,000 7 Segment Margin 37,000 31,000 68,000 8 Common Fixed Costs 9 Net Operating Income $37,000 $31,000 $68,000 0