Morrow, Inc., is considering eliminating its Drapery Department.

Management does not believe that the indirect expenses and the level of opera¬

tions in the other departments will be affected if the Drapery Department closes.

Information from Morrow’s income statement for the fiscal year ended December 31, which is considered a typical year, is shown here

Morrow considers that $18,000 of the operating expenses of the Drapery Department are direct expenses. What is the departmental margin of the Drapery Department?

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Drapery Department All Other Departments $562,000 396,000 Sales $74,000 Cost of Goods Sold 48,000 Gross Profit $26,000 Operating Expenses 30,000 Income (Loss) from Operations $(4,000) $ 55,000 $166,000 111,000 Total of All Departments (including Drapery) $636,000 444,000 $192,000 141,000 $ 51,000