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Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given...

Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:

Alanson Boyne Conway Total
Sales revenue $1,280 $185 $285 $1,750
Less: Variable expenses 1,115 45 228 1,388
Contribution margin $165 $140 $57 $362
Less direct fixed expenses:
Depreciation 50 15 9 74
Salaries 95 85 108 288
Segment margin $20 $40 $(60) $0

Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.

Assume that each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped.

Required:

Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".
Increase $___________

Should Petoskey keep or drop Conway?
Drop

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