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The following is financial information from the two segments of ABC company. DATA: NOTE: Non-identifiable costs were allocated to the segments using the space they

The following is financial information from the two segments of ABC company.

DATA:

NOTE: Non-identifiable costs were allocated to the segments using the space they occupy.

Segment 1 Segment 2 Total
Sales $758,295 $379,148 $1,137,443
Direct Costs (identifiable):
Cost of Goods Sold $120,000 $151,659 $1,636,590
Wages and Salaries $190,000 $113,744 $303,744
Equipment Depreciation $50,000 $37,915 $87,915
Indirect Costs (NOT-identifiable):
Advertising $1,500 $3,500 $5,000
Rent $7,500 $15,500 $23,000
Maintenance $3,000 $7,000 $10,000
Operating Profit $386,295 $49,830 $436,125

NOTE: Non-identifiable costs were allocated to the segments using the space they occupy.

REQUIRED: The company owner believes that segment two should cease operations because it is not generating enough profit. However, the segment analysis indicates that it should NOT be eliminated. Indicate by how much the company's Operating Profit will decrease if segment 2 is eliminated.

Answer:

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