The management accountant for the Martino Organics has prepared the following segmented income statement for the most current year.

Produce Fish & Meat Sundries Total

Sales $80,000 $120,000 $60,000 $220,000

Variable expenses 36,000 65,000 20,000 121,000

Contribution margin 44,000 55,000 40,000 99,000

Other costs 18,000 21,000 8,000 47,000

Segment margin 26,000 34,000 32,000 52,000

Allocated avoidable costs 2,000 3,000 3,0008,000

Segment income 24,00031,00029,00044,000

Allocated corporate costs 7,000 7,000 7,00021,000

Corporate profit $17,000 $ 24,000 $ 22,000 $ 23,000

5) If the Produce department had been eliminated prior to this year, the company would have reported:

A) greater corporate profits.

B) the same amount of corporate profits.

C) less corporate profits.

D) resulting profits cannot be determined.

6) If the Fish & Meat department had been discontinued, the short-term effect on corporate profits would be a decrease of:

A) $55,000.

B) $34,000.

C) $31,000.

D) $24,000.

7) Assume that the Sundries department has been discontinued and long-term capacity of the company has had time to adjust. The projected long-term effect of this action on annual corporate profits would be a decrease of:

A) $40,000.

B) $32,000.

C) $29,000.

D) $22,000.

8) Assume an advertising campaign could increase revenues for any of the products by $15,000. To maximize corporate profits, the ________ department should receive the advertising dollars. Assume the cost of the advertising campaign is less than the revenues it generates.

A) Sundries

B) FIsh & Meat

C) Produce

D) From the information given, the correct product line cannot be determined