Deela Fashions operates three departments: Men’s, Women’s, and Accessories. Departmental operating income data for the third quarter of 2014 are as follows:

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 Deela Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Deela Fashions drop any of the departments? Give your reasoning.

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DEELA FASHIONS Income Statement For the Quarter Ended September 30, 2014 Department Women's Men's Accessories Total Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income (Loss) 58,000 50,000 26,000 S 24,000 108,000 55,000 100,000 263,000 180,000 83,000 73,000 s (18,000) 10,000 30,000 25,000 21,000 S 4,000 92,000 8,000 26,000