Keep-Or-Drop Decision, Alternatives, Relevant Costs Required:1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative margins. Do NOT round interim calculations and, if required, round your answer to the nearest dollar. Ifamount box does not require an entry, leave it blank or enter "0".Reshier CompanySegmented Income StatementModel 1Model 2Model 3TotalContribution marginLess traceable fixed expenses:Product marginLess common fixed expenses:Operating income2. Using your answer to Requirement 1, assume that Reshier Company is considering dropping any model with a negative product margin. What are the alternatives?Which alternative is more cost effective and by how much? (Assume that any traceable fixed costs can be avoided.) Do NOT round interim calculations and, if required, round your answer to the nearest dollar.will add $to operating income3. What if Reshier Company can only avoid 190 hours of engineering time and 5,400 hours of setup time that are attributable to Model 1? How does that affect the alternatives presented in Requirement 2? Which alternative is more cost effectiveand by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar.will add $to operating income$$00000 000 Keep-Or-Drop Decision, Alternatives, Relevant CostsReshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-dutyriding shampooer sold to hotels and convention centers. A segmented income statement is shown below.Model 1Model 2Model 3TotalSales$230,000$590,000$644,000$1,464,000(99,000)(171,120)(341,200)(611,320)Less variable costs of goods soldLess commissions(5,700)(31,500)(23,000)(60,200)Contribution margin$125,300$387,380$279,800$792,480Less common fixed expenses:Fixed factory overheadFixed selling and administrative(395,000)(303,000)$94,480Operating incomeWhile all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10 percent of sales and is low for this type of company. The company's controller gathered additional information on fixedcosts to see why they were so high. The following information on activities and drivers was gathered:Driver Usage by ModelActivityModel 1Model 2Model 3142EngineeringActivity Cost Activity DriverEngineering hoursSetup hoursService calls$88,000194,000102,000Setting up78012,80014,2007812,90029,142Customer service1,48019,142In addition, Model 1 requires the rental of specialized equipment costing $23,500 per year.Required:1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative margins. Do NOT round interim calculations and, if required, round your answer to the nearest dollar. Ifamount box does not require an entry, leave it blank or enter "0".

The question is based on the concept of Cost Accounting.

1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative margins. Do NOT round interim calculations and, if required, round your answer to the nearest dollar. If amount box does not require an entry, leave it blank or enter "0". Reshier Company Segmented Income Statement Model 1 Model 2 Model 3 Total Contribution margin. Less traceable fixed expenses: Product margin Less common fixed expenses:

1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative margins. Do NOT round interim calculations and, if required, round your answer to the nearest dollar. If amount box does not require an entry, leave it blank or enter "0". Reshier Company Segmented Income Statement Model 1 Model 2 Model 3 Total Contribution margin. Less traceable fixed expenses: Product margin Less common fixed expenses:

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Keep-Or-Drop Decision, Alternatives, Relevant Costs

Required:
1. Reformulate the segmented income statement using the additional information on activities. Use a minus sign to indicate any negative margins. Do NOT round interim calculations and, if required, round your answer to the nearest dollar. If
amount box does not require an entry, leave it blank or enter "0".
Reshier Company
Segmented Income Statement
Model 1
Model 2
Model 3
Total
Contribution margin
Less traceable fixed expenses:
Product margin
Less common fixed expenses:
Operating income
2. Using your answer to Requirement 1, assume that Reshier Company is considering dropping any model with a negative product margin. What are the alternatives?
Which alternative is more cost effective and by how much? (Assume that any traceable fixed costs can be avoided.) Do NOT round interim calculations and, if required, round your answer to the nearest dollar.
will add $
to operating income
3. What if Reshier Company can only avoid 190 hours of engineering time and 5,400 hours of setup time that are attributable to Model 1? How does that affect the alternatives presented in Requirement 2? Which alternative is more cost effective
and by how much? Do NOT round interim calculations and, if required, round your answer to the nearest dollar.
will add $
to operating income
$
$
00000 000

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Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $586,000 $607,000 $1,443,000 Less variable costs of goods sold (90,000) (173,760) (334,400) (598,160) Less commissions (5,200) (36,000) (19,250) (60,450)      Contribution margin $154,800 $376,240 $253,350 $784,390 Less common fixed expenses:      Fixed factory overhead (405,000)      Fixed selling and administrative (291,000) Operating income $88,390 While all models have positive contribution margins, Reshier Company is…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $586,000 $607,000 $1,443,000 Less variable costs of goods sold (90,000) (173,760) (334,400) (598,160) Less commissions (5,200) (36,000) (19,250) (60,450)      Contribution margin $154,800 $376,240 $253,350 $784,390 Less common fixed expenses:      Fixed factory overhead (405,000)      Fixed selling and administrative (291,000) Operating income $88,390 While all models have positive contribution margins, Reshier Company is…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $590,000 $619,500 $1,459,500 Less variable costs of goods sold (86,000) (160,560) (332,800) (579,360) Less commissions (5,200) (34,500) (23,750) (63,450)      Contribution margin $158,800 $394,940 $262,950 $816,690 Less common fixed expenses:      Fixed factory overhead (375,000)      Fixed selling and administrative (283,000) Operating income $158,690 While all models have positive contribution margins, Reshier Company is…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $235,000 $590,000 $658,500 $1,483,500 Less variable costs of goods sold (91,500) (166,280) (356,000) (613,780) Less commissions (5,700) (40,000) (21,750) (67,450)      Contribution margin $137,800 $383,720 $280,750 $802,270 Less common fixed expenses: Fixed factory overhead (385,000) Fixed selling and administrative (307,000) Operating income $110,270 While all models have positive contribution margins, Reshier Company is concerned…
Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $230,000 $562,000 $650,500 $1,442,500 Less variable costs of goods sold (88,000) (159,240) (364,400) (611,640) Less commissions (5,400) (39,000) (21,750) (66,150)      Contribution margin $136,600 $363,760 $264,350 $764,710 Less common fixed expenses:      Fixed factory overhead (400,000)      Fixed selling and administrative (299,000) Operating income $65,710 While all models have positive contribution margins, Reshier Company is…
2. Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $240,000 $550,000 $655,000 $1,445,000 Less variable costs of goods sold (96,000) (174,200) (354,000) (624,200) Less commissions (4,200) (27,500) (22,000) (53,700)      Contribution margin $139,800 $348,300 $279,000 $767,100 Less common fixed expenses:      Fixed factory overhead (375,000)      Fixed selling and administrative (291,000) Operating income $101,100 While all models have positive contribution margins, Reshier Company…
2. Keep-Or-Drop Decision, Alternatives, Relevant Costs Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $240,000 $550,000 $655,000 $1,445,000 Less variable costs of goods sold (96,000) (174,200) (354,000) (624,200) Less commissions (4,200) (27,500) (22,000) (53,700)      Contribution margin $139,800 $348,300 $279,000 $767,100 Less common fixed expenses:      Fixed factory overhead (375,000)      Fixed selling and administrative (291,000) Operating income $101,100 While all models have positive contribution margins, Reshier Company…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $586,000 $607,000 $1,443,000 Less variable costs of goods sold (90,000) (173,760) (334,400) (598,160) Less commissions (5,200) (36,000) (19,250) (60,450)      Contribution margin $154,800 $376,240 $253,350 $784,390 Less common fixed expenses:      Fixed factory overhead (405,000)      Fixed selling and administrative (291,000) Operating income $88,390 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $245,000 $550,000 $619,500 $1,414,500 Less variable costs of goods sold (95,500) (172,440) (357,600) (625,540) Less commissions (4,000) (26,500) (21,250) (51,750)      Contribution margin $145,500 $351,060 $240,650 $737,210 Less common fixed expenses:      Fixed factory overhead (380,000)      Fixed selling and administrative (299,000) Operating income $58,210 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $250,000 $590,000 $619,500 $1,459,500 Less variable costs of goods sold (86,000) (160,560) (332,800) (579,360) Less commissions (5,200) (34,500) (23,750) (63,450) Contribution margin $158,800 $394,940 $262,950 $816,690 Less common fixed expenses: Fixed factory overhead (375,000) Fixed selling and administrative (283,000) Operating income $158,690 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
Reshier Company makes three types of rug shampooers. Model 1 is the basic model rented through hardware stores and supermarkets. Model 2 is a more advanced model with both dry-and wet-vacuuming capabilities. Model 3 is the heavy-duty riding shampooer sold to hotels and convention centers. A segmented income statement is shown below. Model 1 Model 2 Model 3 Total Sales $225,000 $590,000 $648,500 $1,463,500 Less variable costs of goods sold (93,500) (168,040) (354,000) (615,540) Less commissions (4,000) (33,500) (23,000) (60,500) Contribution margin $127,500 $388,460 $271,500 $787,460 Less common fixed expenses: Fixed factory overhead (390,000) Fixed selling and administrative (283,000) Operating income $114,460 While all models have positive contribution margins, Reshier Company is concerned because operating income is less than 10…
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