Question

Mila Fashions operates three departments Men's, Women's and Accessories Departmental operating income data for the third quarter of 2018 are as follows EFE (Click the icon to view the data) (Click the icon to view additional information) If Mila Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Mila 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 dropping the Accessories Department, the only Department showing an operating loss this quarter (Enter decreases to profits with a parentheses or minus sign) Mila Fashions Analysis of Dropping the Accessories Depar Expected decrease in revenues Expected decrease in costs Expected decrease in variable costs Expected decrease in forced costs Choose from any list or enter any number in the input felds and then continue to the next question

Answer 1

Expected decrease in revenues		$   95,000
Expected decrease in variable costs	$ 94,000
Expected decrease in fixed costs	$ 24,000
Expected decrease in total costs		$ 118,000
Increase in operating Income		$   23,000
Mila Fashion should drop Accessories department because it would increase the operating income by $23,000.