The management accountant for the Chocolate S'more Company has prepared the following segmented income statement. Chocolate Other Candy Fudge Total Sales $40,000 $25,000 $35,000 $100,000 Variable expenses 26,000 15,000 19,000 60,000 Contribution margin 14,000 10,000 16,000 40,000 Other costs 2,000 3,000 2,000 7,000 Segment margin 12,000 7,000 14,000 33,000 Allocated avoidable costs 3,000 3,000 2,000 8,000 Segment income 9,000 4,000 12,000 25,000 Allocated corporate costs 5,000 5,000 5,000 15,000 Corporate profit $4,000 $(1,000) $7,000 $10,000 1.) If the smore product line were eliminated corporate profit would be $ which is an increase/ decrease in corporate profits of

2.) The Smore product should/ Should not be eliminated Why?

3.) Assume an advertising campaign could increase revenue for any of product by 15,000. in this situation CM%/Segment Margin should be evaluate. To maximize corporate profits the Chocolate/Smore/Fudge segment should recieve the advertising dollars.

Why?