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 Extreme Sports sells logo sports merchandise

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 Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to continue its custom embroidery service. All of the company's direct fixed costs can be avoided if a segment is dropped. The information is available for the segments. Custom Logo Embroidery Apparel Sales $59,000 $251,000 Variable costs 30,000 110,000 Contribution margin $29,000 $141,000 Direct fixed costs 23,000 40,000 Allocated common fixed costs 13,000 51,000 Net income $(7,000) $50,000 A. What will be the impact on net income if the embroidery segment is dropped? Net income $ B. Assume that if the embroidery segment is dropped, apparel sales will increase 10%. What is the impact on the contribution margin and net income solely for the apparel? Contribution margin Net income C. Identify one cost that is not relevant in this analysis.