What would be the effect on income if product A were dropped? Note: 3,700 is not correct.

*Problem 8-29 (Part Level Submission) Sandhill Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows Total Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses Total fixed expenses Operating income $2,221,000 $1,402,000 $1,819,600 $5,442,600 601,300 1,083,800 3,373,100 $533,000 800,700 $735,800 $2,069,500 $514,000 $427,000 $522,000 $1,463,000 46,000 285,000 $624,000 $522,000 $648,000 $1,794,000 $(91,000) $278,700 $87,800 $275,500 1,688,000 15,300 94,700 10,600 84,400 20,100 105,900 Advertising expense Specific to each product Depreciation expense Specific to each product; no other use available, no resale value Corporate expenses Allocated based on number of employees Your answer is correct. Restate the income statement in segment margin format. Total sp,221,000 $ 1,402,000 51,819,600 S 442,600 ales Revenu ariable expense 1,688,000 601,30 1,083,800 373,100 T Contribution marginl 133,000 800,7 735,800 2,069,50 Less Direct fixed expense 514,00 ,0001152 1,463,000 dvertisin 522,000 1,463,000 115,300! [ 0,60 46,000) reciation 120,1001 33,700363,00 193,700 560,500 ment margin 560,50 Less Common fixed expense 285,000 $275,500 erating prof Your answer is partially correct. Try again What would be the effect on income if product A were dropped? 3,700 Net income would Iderease by $