Question
Consider the following segmented income statement to answer the following questions: 1. What would be the...
Consider the following segmented income statement to answer the following questions:
1. What would be the common fixed costs for the company if Product A were was dropped (no longer produced)?
2. Assume that all direct fixed costs are salary costs. By how much will net income change if Product A is dropped? Enter your answer as a positive number regardless of whether you think income will increase or decrease.
| Income Statement | Product A | Product B | Total |
| Sales revenue | 64000 | 110700 | 174700 |
| Variable costs | 18000 | 41000 | 59000 |
| Contribution margin | 46000 | 69700 | 115700 |
| Direct Fixed costs | 9200 | 13940 | 23140 |
| Segment margin | 36800 | 55760 | 92560 |
| Common fixed costs | 2560 | 4428 | 6988 |
| Net income | 34240 | 51332 | 85572 |
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