Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of
2024

are as follows:

Question

Fashions operates three​ departments: Men's,​ Women's, and Accessories. Departmental operating income data for the third quarter of			2024			are as​ follows:					1​(Click			the icon to view the​ data.)			2​(Click			the icon to view additional​ information.)				If			Sheila			Fashions drops a​ department, it will not incur these fixed costs. Under these​ circumstances, should			Sheila			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.)																																					Sheila Fashions																																		Analysis of Dropping the Accessories Department																																									Expected decrease in revenues																																																																																																																												Expected decrease in costs:																																																																																												Expected decrease in variable costs																																																																																																						Expected decrease in fixed costs																																																																																																													Expected decrease in total costs																																																																																																							(1)																														in operating income																																																																																										Under these​ circumstances, should			Sheila			Fashions drop any of the​ departments? Give your reasoning.				​Decision:			Sheila			Fashions							(2)																				because							(3)																				1: Data Table																																																							Sheila Fashions																																																										Income Statement																																																										For the Quarter Ended September 30, 2024																																																																																			Department																																																																																																												Men's																																												Women's																																												Accessories																																												Total																																																Net Sales Revenue																									$111,000																									$57,000																									$98,000																									$266,000																																							Variable Costs																									56,000																									34,000																									89,000																									179,000																																							Contribution Margin																									55,000																									23,000																									9,000																									87,000																																							Fixed Costs																									19,000																									17,000																									27,000																									63,000																																							Operating Income (Loss)																									$36,000																																		$6,000																																		$(18,000)																																		$24,000																																													2: More Info						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																																		(1)																																Expected decrease																	Expected increase																(2)																					should drop the Accessories Department																	should keep all the departments																(3)																					relevent expenses are greater than the revenues which will result in an increase in operating income if the department is dropped.																	revenues are greater than the relevant expenses which will result in a decrease in operating income if the department is dropped.																	revenues from each department exceed variable expenses from each department.

Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2024 are as follows: 1(Click the icon to view the data.) 2(Click...

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Sheila Fashions
Analysis of Dropping the Accessories Department
	Expected decrease in revenues
	Expected decrease in costs:
	Expected decrease in variable costs
	Expected decrease in fixed costs
	Expected decrease in total costs
	(1)	in operating income

Sheila Fashions
Income Statement
For the Quarter Ended September 30, 2024
	Department
	Men's	Women's	Accessories	Total
Net Sales Revenue	$111,000	$57,000	$98,000	$266,000
Variable Costs	56,000	34,000	89,000	179,000
Contribution Margin	55,000	23,000	9,000	87,000
Fixed Costs	19,000	17,000	27,000	63,000
Operating Income (Loss)	$36,000	$6,000	$(18,000)	$24,000

•	Salary of the department's manager
•	Cost of advertising directly related to that department

Fashions operates three​ departments: Men's,​ Women's, and Accessories. Departmental operating income data for the third quarter of 2024 are as​ follows: 1​(Click the icon to view the​ data.) 2​(Click...

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Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of 2024 are as follows: 1(Click the icon to view the data.) 2(Click...