Segmented Income Statements and Decision Making.
If online sales increase $10,000 (= $100,000 X 10%), then the Online Sales segment’s contribution margin will increase by $6,300 (= $10,000 X 63%).
The overall profit impact of discontinuing the Retail Stores sales channel can be summarized as follows:
Avoidance of the retail segment’s loss $3,000
Online Sales additional contribution margin 6,300
Increase in ProphetMax’s net operating income $9,300