A company is facing serious problems related to COVID 19, so it has to choose which segment to sacrifice due to the lack of funds needed for product manufacture and also limited working hours by the government. This company is engaged in fashion. Data on sales and expenses for the past quarter follow: Bag Wallet 470,000 $ 100,000 $ 250,000 Variable Manufacturing and Selling expenses 35,000 $ 50,000 contribution margin 310,000 ? $ 175,000 $ 70,000 Watch Total $ Sales ? ? $ ? Fixed expenses Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses Total Fixed expenses Net operating income (loss) $ $ $ ? 75,000 $ 44,000 39,000 $ $ 221,000 $ 15,000 $ $ 15,000 $ 20,000 $ $ (5,000) 50,000 $ 10,000 14,000 $10,000 12,000 $ 12,000 25,000 $ 18,000 101,000 ? ? $ 20,000 ? $ ? 2 Management is concerned about the continued losses shown by the bag division and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce bag has no resale value and does not wear out. Required: 1. Should bag division be discontinued? Show the calculation and explain the calculation (10%) 2. Recast the above data in a format that would be more usable to management in assessing the long-run profitability of the various product lines. (10%) 3. If the bag Department is dropped, what will be the effect on the net operating income of the company as a whole and if it will affect 10% decrease sales in watch division and affect 15% decrease sales in wallet division (10%) 4. Based on your opinion, is this a good choice for the company to drop bag division? In this COVID 19 era, what should company do related to their employee especially in the bag division? If you are the decision making in the company as CEO, how you can tell them when you want to drop the bag division? (10%)