. Changing Product Lines. Kelley Peck, president of Peck Department Store, thinks that the Paint Department should be dropped. She wants to add a Peanut Butter Boutique in the same space. Data for 1998 in thousands are:

Allocated expenses are common costs and are assigned by a mathematical formula.
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Ignoring your attitude toward peanut butter, what should she do to maximize profits? Explain.

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Sales..... Cost of sales... Gross margin Direct expenses Allocated expenses.. Net income.. Paint $10,000 (6,000) All Other Departments $ 90,000 (54,000) $ 4,000 $ 36,000 (1,000) (4,000) (14,000) (16,000) $ (1,000) $ 6,000 Store Total Proposed Peanut Butter Boutique $100,000 (60,000) $ 40,000 (15,000) (20,000) $ 5,000 $ 20,000 (15,000) $ 5,000 (3,000) (1,000) $ 1,000