Wildhorse 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: Sales Variable expenses Contribution margin Advertising expense Deprecion expense Corporate expenses Total fixed expenses Operating income Total $2,235,000 $1,410,000 $1,806,500 $5,451,500 1,698,000 601,200 1,099,800 3,399,000 $537,000 $808,800 $706,700 $2,052,500 $520,000 $429,000 $521,000 $1,470,000 16,700 10,700 21,500 48,900 92,300 84,100 106,600 283,000 $629,000 $523,800 $649,100 $1,801,900 $(92,000) $285,000 $57,600 $250,600 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. (a) Your answer is correct Restate the income statement in segment margin format A B Total Sales Revenue 2235000 1410000 1806500 5451500 Your answer is correct. Restate the income statement in segment margin format. A B C Total 2235000 1410000 1806500 5451500 Sales Revenue $1 Variable expenses 1698000 601200 1099800 3399000 V Contribution margin 537000 808800 706700 2052500 Less Direct fixed expenses Advertising 520000 429000 521000 1470000 16700 Depreciation 10700 21500 48900 902 300 369100 164200 Segment margin 533600 Less Common fixed expenses 283000 250600 Operating profit (b) Your answer is correct. What would be the effect on income if product A were dropped? 17000 Net income would decrease by $1 Click if you would like to show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO VIDEO Attempts: 4 of 15 used (c) Management is considering making a new product using product A's equipment. If the new product's selling price per unit were $10, its variable costs were $5, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile? (Round answers to o decimal places, e.g. 125.) Units Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO VIDEO