The following income statement has been prepared for the most recent period for the piano segment of a music company. $700,000 266,000 434,000 Segment Income Statement Piano Sales Less: Variable expenses Variable manufacturing costs $210,000 Variable shipping costs 21,000 Commissions 35,000 Contribution margin Less: Fixed expenses General factory overhead 81,500 Salary of line manager 69,500 Depreciation of equipment 78,500 Advertising 91,500 Factory rent 47,000 General admin. expenses 70,000 Operating income / (loss) 438,000 (4,000) The company is deciding if it should keep or drop the piano segment based on the following facts: . General factory overhead would remain as a fixed expense if the piano segment is dropped. General administrative expenses would be reduced by 28% if the piano segment is dropped. If the company drops this segment, it will gain a contribution margin of $21,000 by manufacturing other products. The company will continue to pay rent to manufacture other products. 1. What is the contribution margin lost if the piano segment is dropped? (1 mark) 2. What are the total fixed expenses that can be avoided if the piano segment is dropped? (4 marks) 3. What is the contribution margin gained if the company drops the piano segment? (1 mark) 4. What is the net advantage or disadvantage of dropping this segment? (1 mark) Negative numbers should be entered with a negative sign, not brackets. Enter a disadvantage/loss as a negative number. 5. Should the piano segment be kept or dropped? (1 mark) The piano segment should be kept. The piano segment should be dropped