Reference no: EM132515722

Eliminating operations - Capital Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, in $000s, is as follows:

                                                    A                            B                                   C                                    Total

Sales revenue                            $2,200                     $1,400                     $1,800                   $5,400
Variable expenses                        1,650                          600                    1,080                     3,330
Contribution margin                      $ 550                          $ 800                  $ 720                   $2,070
Advertisinga expense                     $ 500                          $ 475                    $ 520                    $1,495
Depreciation expense                           15                         10                         20                       45
Corporate expenses                               90                             80                      105                            275
Total fixed expenses                          $ 605                         $ 565                             $ 645                      $1,815
Operating income                                   $ (55)                         $ 235                      $ 75                  $ 255

1. Specific to each product.
2. Specific to each product; no other use available, no resale value.
3. Allocated based on number of employees.

Required

Question 1: Restate the income statement in segment margin format.