The segmented income statement for XYZ Company for the year ended December 31, 2016, follows: XYZ COMPANY Segmented Income Statement For the Year Ended December 31, 2016 Total Company Product A Product B Product C Sales $ 624,000 $ 308,000 $ 128,000 $ 188,000 Variable expenses 280,000 153,000 54,000 73,000 Contribution margin $ 344,000 $ 155,000 $ 74,000 $ 115,000 Fixed expenses 283,000 164,000 50,000 69,000 Operating income $ 61,000 $ (9,000 ) $ 24,000 $ 46,000 The company is concerned about the performance of product A, and you have been asked to analyze the situation and recommend to the president whether to continue or discontinue the product. During your investigation, you discover that certain fixed expenses are traceable directly to each product line as indicated here: Total Company Product A Product B Product C Direct fixed expenses $104,000 $75,000 $9,000 $20,000 The remaining fixed expenses are considered to be corporate-wide expenses that have been allocated to each product line based on sales revenue. Required: a. What will be the effect of the decision to discontinue product A on operating income?

rating income will for the XYZ Company if it di Product A b. Assume that product A is discontinued. Prepare a segmented income statement for the remaining products. Allocate corporate-wide fixed expenses as described. (Round intermediate calculations to 2 decimal places.) XYZ COMPANY Segmented Income Statement For the Year Ended December 31, 2016 Total Company Product EB Product C Sales Variable expenses Contribution margin Direct fixed expenses Common fixed expenses Operating income/loss c. Starting with the segmented income statement, use the information you discovered during your investigation to present a more appropriately designed segmented income statement. XYZ COMPANY Segmented Income Statement For the Year Ended December 31, 2016 Total Company Product A Product B Product C Sales Variable expenses Contribution margin Direct fixed expenses Segment margin Common fixed expenses Operating income/loss