On the basis of the following data, the general manager of Featherweight Shoes Inc. decided to discontinue Children's Shoes because it reduced income from operations by $17,000. What is the flaw in this decision, if it is assumed fixed costs would not be materially affected by the discontinuance?

Transcribed Image Text:

Featherweight Shoes Inc. Product-Line Income Statement Forthe Year Ended April 30, 2016 Childrens Shoes Men's Shoes Women's Shoes Total $500,000 Sales Costs of goods sold $235,000 $300,000 1,035,000 $220,000 500,000 Variable costs Fixed costs Total cost of goods sold $130,000 41,000 171,000 64,000 $150,000 60,000 $210,000 90,000 120,000 221 340,000 721,000 5160,000 314,000 Gross proft Selling and adminstrative expenses: Variable seling and admin. expenses Fixed selling and admin. expenses Total selling and admin. expenses 46,000 35,000 81,000 $ (17,000) 45,000 20,000 65,000 25,000 95,000 186,000 80,000 S120,000 266,000 S 40,000 48,000 25,000 Income (loss) from operations