The company is considering discontinuing Product A from its product line based on the following profitability report.

Profitability Report month ended February 28, 2019 Total Product A Product $300,000 $90,000 $ 210,000 96,000 Sales Expenses Prime costs Advertising General administrative Salaries Sales support Warehouse rent Amortization equipment Amortization office facilities Profit (loss) 25,200 12,600 18,000 132,000 36,000 36,000 10,800 18,000 5,400 36,000 18,000 42.000 14,000 12000 3,600 9,000 3,000 3.000 1.000 $12.000 $.11.800) 28,000 8,400 6,000 2.000 $13.800 1 2 Prime costs include 10% of sales commission, based on sales dollars. Advertising cost allocated to products on the basis of sales dollars. The monthly total includes $1,500 general advertising, which was spent on enhancing the overall company's brand image and is unrelated to a specific product. 1 General administrative expense allocated to products on the basis of sales dollars. This expense is related to the overall administration of the company as a whole. " Salary expenses are for personnel associated with each product $ Sales support and amortization expenses are allocated to each product in accordance with company policy (one-third to Product A and two-thirds to Product 8). Amortization expense for office facilities is related to overall administration of the company as a whole Warehouse rent expense is allocated on the basis of sales dollars Although all expenses, other than prime costs, are fixed with respect to sales and output, the following additional information shows the consumption of resource drivers for some of the non-prime costs by each product. The remaining non-prime costs cannot be associated with any specific product Resource Consumption for February 2010 by Product Although all expenses, other than prime costs, are fixed with respect to sales and output, the following additional information shows the consumption of resource drivers for some of the non-prime costs by each product. The remaining non-prime costs cannot be associated with any specific product, Resource Consumption for February 2019 by Product Expenses Resource B Advertising Advertising time 37% 63% Sales support Orders 2,520 5,880 Warehouse rent Square metres 2,400 13,600 Amortization equipment Machine time used 30% 70% Required 9 a. Prepare a segmented income statement using the contribution format 3 b. Indicate whether you would recommend discontinuing Product and briefly explain why