Melanie Fashions sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the following data:
Per Item
Designer Moderately Priced
Average sale price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$210....................$85
Average variable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.....................25
Average fixed expenses (allocated) . . . . . . . . . . . . . . . . . . . . . ... 15.....................10
Average operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$120..................$50
The Melanie Fashions store in Reno, Nevada, has 15,000 square feet of floor space. If Melanie emphasizes moderately priced goods, it can display 900 items in the store. If Melanie emphasizes designer wear, it can display only 600 designer items to create more of a boutique-like atmosphere. These numbers also are the average monthly sales in units. Prepare an analysis to show which product to emphasize.