Question

Gila Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2016 are as follows: 2 (Click the icon to view the data.) Assume that the fixed costs assigned to each department include only direct fixed costs of the department: Salary of the department's manager • Cost of advertising directly related to that department If Gila Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Gila Fashions drop any of the departments? Give your reasoning. Begin by completing the following analysis to determine the increase or decrease in operating income from drop parentheses or minus sign.) i Data Table Gila Fashions Analysis of Dropping the Accessories Department Gila Fashions Expected decrease in revenues Expected decrease in expenses: Expected decrease in variable expenses Income Statement For the Quarter Ended September 30, 2016 Department Expected decrease in fixed expenses Women's Accessories Total Expected decrease in total expenses in operating income Sales Revenue $ Men's 103,000 $ 63,000 56,000 $ 32,000 97,000 $ 94,000 256,000 189,000 Variable Costs Contribution Margin Choose from any list or enter any number in the input fields and then click Check Answer. Fixed Costs 40,000 22,000 18,000 $ 24,000 16,000 8,000 $ 3,000 21,000 (18,000) $ 67,000 59,000 8,000 part remaining Operating Income (Loss) $

Answer 1

Answer:- Gila fashions Analysio of Doyopping te Accesso sies Depastmeut. partioulars Ezpectod Decrease in sevenues Amount $97.000 Lesst Expected Deerease in Expence:- Ex pected Deerease in expeust $94,000 Expecled pecsease in xed expeuse$21,000 Expected Deesease in tolal expeuse 115,000 vasiable క్రీ 8,000) Decrease inoperalivg income L$97,000- $ 115,000] .: Ite operatiug Income incxeaud by $18,000