Knight Fashion store operates three departments: Men€™s, Women€™s, and Accessories. Knight
Fashion allocates all fixed expenses (unavoidable building depreciation and utilities) based on each department€™s floor space. Departmental operating income data for the third quarter of the current year are as follows:

The store will remain in the same building regardless of whether any of the departments are dropped. Should Knight Fashion drop any of the departments? Give your reason.

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Department Men's Women's Accessories Total $105,000 $54,000 $100,000 $259,000 Sales revenue. Variable expenses. Fixed expenses Total expenses. Operating income (loss) 60,000 30,000 80,000 170,000 25,000 20,000 25,000 70,000 5,000 50,000 105,000 240,000 $20,000 4,000 (5,000) $19,000