4. On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Childrens Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance?

Children's Shoes $165,000 Total Men's Shoes $300,000 Women's Shoes $500,000 $965,000 Sales Costs of goods sold: Variable costs $105,000 $150,000 $220,000 $475,000 60,000 120,000 212,000 $210,000 $340,000 $687,000 $90,000 $160,000 $278,000 Fixed costs 32,000 Total cost of goods $137,000 sold Gross profit $28,000 Selling and adminstrative expenses: Variable selling and $21,000 admin. expenses Fixed selling and 17,000 admin. expenses Total selling and $38,000 admin. expenses Income (loss) from $(10,000) operations $45,000 $95,000 $161,000 20,000 25,000 62,000 $65,000 $120,000 $223,000 $25,000 $40,000 55,000 If the Children Shoe's are discontinued, the company's income would decrease by $